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Bureau of Mines Information Circular/1987 



Iron Ore Availability— Market 
Economy Countries 

A Minerals Availability Appraisal 

By Judith L. Bolis and James A. Bekkala 



UNITED STATES DEPARTMENT OF THE INTERIOR 



Information Circular 9128 



Iron Ore Availability— Market 
Economy Countries 

A Minerals Availability Appraisal 

By Judith L. Bolis and James A. Bekkala 



■ 



s 




UNITED STATES DEPARTMENT OF THE INTERIOR 
Donald Paul Hodel, Secretary 

BUREAU OF MINES 
Robert C. Horton, Director 



As the Nation's principal conservation agency, the Department of the Interior has 
responsibility for most of our nationally owned public lands and natural resources. This 
includes fostering the wisest use of our land and water resources, protecting our fish 
and wildlife, preserving the environment and cultural values of our national parks and 
historical places, and providing for the enjoyment of life through outdoor recreation. 
The Department assesses our energy and mineral resources and works to assure that 
their development is in the best interests of all our people. The Department also has 
a major responsibility for American Indian reservation communities and for people who 
live in island territories under U.S. administration. 



$ 







Library of Congress Cataloging-in-Publication Data 



Bolis, Judith L. 

Iron ore availability— market economy countries. 

(Information circular ; 9128) 

Bibliography: p. 56 

Supt. of Docs, no.: I 28.27: 9128 

1. Iron ores. I. Bekkala, James A. II. Title. III. Series: Information circular (United 
States. Bureau of Mines) ; 9128. 

'P Na O O .' U ' l [TN401] 622 s [338.273] 86-600224 



Ill 



PREFACE 



The Bureau of Mines is assessing the worldwide availability of selected minerals 
of economic significance, most of which are also critical minerals. The Bureau iden- 
tifies, collects, compiles, and evaluates information on producing, developing, and ex- 
plored deposits, and mineral processing plants worldwide. Objectives are to classify both 
domestic and foreign resources, to identify by cost evaluation those demonstrated 
resources that are reserves, and to prepare analyses of mineral availability. 

This report is one of a continuing series of reports that analyze the availability of 
minerals from domestic and foreign sources. Questions about, or comments on these 
reports, should be addressed to Chief, Division of Minerals Availability, Bureau of Mines, 
2401 E St., NW, Washington, DC 20241. 



CONTENTS 



Preface iii 

Abstract 1 

Introduction 2 

Acknowledgments 2 

Commodity overview 2 

State of the industry 2 

Economic impact of Government-controlled 

operations 4 

International trade 4 

International transportation 6 

Inland shipping 8 

Price structure 8 

Iron ore resources and processing 9 

Geology 9 

Iron ore mining 10 

Beneficiation methods 10 

Agglomeration methods 11 

Methodology 12 

Evaluated iron ore resources 13 

Costs 17 

Capital costs 17 

Operating costs 17 

Shipping costs and rates 18 

Availability of iron ore in market economy countries 19 

Annual availability 19 

Total availability 21 

Sinter fines 21 



Page 

Lump ore 22 

Pellets 22 

Pellet feed 24 

Summary of total availability 24 

Regional availability of iron ore 25 

North America 25 

United States 25 

Canada 29 

Mexico 29 

South America 31 

Brazil 35 

Venezuela 35 

Chile 37 

Peru 39 

Australia and New Zealand 39 

Europe 42 

Sweden and Norway 42 

Spain and Portugal 44 

Africa 46 

Liberia 46 

Republic of South Africa 49 

Other African countries 49 

India 52 

Regional availability summary 53 

Conclusions 54 

References 55 

Bibliography 56 



ILLUSTRATIONS 



1. Major exporters and importers of iron ore in the international market in 1985 5 

2. World iron trade pattern, early 1980's 5 

3. Ocean freight rate fluctuations, early 1980's 7 

4. Minerals Availability Program evaluation procedure 12 

5. Mineral resource classification categories 16 

6. Freight operating cost curves 18 

7. Annual availability of sinter fines for producers and nonproducers at various total costs 20 

Total potential availability at a 15-pct DCFROR for producers and nonproducers in market economy countries: 

8. Sinter fines 21 

9. Lump ore 22 

10. Pellets 23 

11. Pellet feed ■ 24 

12. Location map, U.S. deposits and ranges 26 

13. Location map, Mesabi range deposits 26 

14. Location map, Wisconsin and Michigan range deposits 27 

15. Total potential availability at a 15-pct DCFROR for selected domestic producers and operations permanently 

closed since 1981 28 

16. Location map, Canadian deposits 30 

17. Location map, Mexican deposits 31 

Comparison of total potential availability at a 15-pct DCFROR: 

18. Sinter fines, Brazil and other South American countries 32 

19. Sinter fines, Africa, Australia, and Brazil 33 

20. Lump ore, Brazil and other South American countries 34 

21. Total potential availability of pellets and pellet feed at a 15-pct DCFROR for South American countries . . 34 

22. Location map, Brazilian deposits 36 



VI 

Page 

23. Location map, Venezuelan deposits 37 

24. Location map, Chilean and Peruvian deposits 38 

25. Location map, western Australian deposits 40 

26. Location map, southern Australian deposits 41 

27. Location map, New Zealand deposit 43 

28. Location map, Swedish and Norwegian deposits 44 

29. Location map, Spanish and Portuguese deposits 45 

30. Location map, western African deposits 47 

31. Location map, South African deposits 48 

32. Location map, northern African deposits 50 

33. Location map, central African deposits 51 

34. Location map, Indian deposits 52 



TABLES 

1. World iron ore production 3 

2. Utilization of mine capacity in the 10 largest MEC iron ore producing nations, 1982 3 

3. Location and capacities of iron ore exporting ports 6 

4. Domestic iron ore prices 8 

5. International iron ore prices, 1984 8 

6. Iron ore products, sizes, and commodity prices 13 

7. MEC iron ore deposit information and demonstrated resources used for analysis 14 

8. Capital cost estimates for a large Australian and a large Brazilian iron ore mine 17 

9. Operating cost ranges for selected MEC iron ore mines and deposits 17 

10. Pelletizing operating costs for selected MEC iron ore mines and deposits 18 

11. Estimates of rail transportation costs 18 

12. Ranges of spot iron ore ocean freight rates, 1984 19 

13. Summary of annual availability of iron ore products 19 

14. Summary of total availability of iron ore products 25 

15. Comparison of prices and freight rates for Brazilian and Australian sinter fines in European and Japanese markets 33 

16. Summary of availability of iron ore products, for selected regions 54 





UNIT OF MEASURE ABBREVIATIONS USED IN THIS REPORT 


DWT 


deadweight ton 1 


MMlt/yr 


million long tons per year 


ft 


foot 


MMst 


million short tons 


in 


inch 


Mmt 


million metric tons 


kg 


kilogram 


Mmt/yr 


million metric tons per year 


km 


kilometer 


mt 


metric ton 2 


lb 


pound 


mt/d 


metric ton per day 


L 


liter 


mt/h 


metric ton per hour 


L/mt 


liter per metric ton 


pet 


percent 


It 


long ton 2 


pct/yr 


percent per year 


ltu 


long ton iron unit 


st 


short ton 2 


lt/yr 


long ton per year 


wt pet 


weight percent 


m 


meter 


yr 


year 


mm 


millimeter 


<P/(mt km) 


cents per metric ton-kilometer 


MMlt 


million long tons 







'Measured as the difference between a ship's displacement light and her displacement loaded; the carrying capacity of a ship measured in long tons (2,240 lb). 
2 1 mt = 0.98421 It = 1.1023 st. 



IRON ORE AVAILABILITY— MARKET ECONOMY COUNTRIES 
A Minerals Availability Appraisal 

By Judith L. Bolis 1 and James A. Bekkala 1 



ABSTRACT 

The Bureau of Mines estimated the potential availability of iron ore from 129 
domestic and foreign mines and deposits in 25 market economy countries. The avail- 
ability of four products on a total and regional basis was determined from demonstrated 
resources of 75.3 billion It. 

From the resources evaluated there are a total of 18.6 billion It of sinter fines, 4.9 
billion It of lump ore, 14.7 billion It of pellets, and 820 MMlt of pellet feed potentially 
available at a 15-pct DCFROR, f.o.b. port. On a regional basis, at or below a total cost 
of $0.26 per iron unit there are 1.7 billion It, 2.8 billion It, and 186 MMlt of sinter fines 
potentially available from Brazil, Australia, and Africa, respectively. There are 825 
MMlt of lump ore from Brazil and 1.4 billion It from Australia potentially available 
at or below a total cost of $0.24 per iron unit. There are 2.1 billion It of pellets poten- 
tially available from the United States at or below a total cost of $0.80 per iron unit, 
while 442 MMlt are potentially available in Brazil at or below $0.38 per iron unit. South 
America has 208 MMlt of pellet feed potentially available at or below a total cost of 
$0.28 per iron unit. 

While the resources of iron ore are more than adequate to satisfy demand, the future 
of the iron ore industry is very dependent upon changes in the world economy, and on 
the domestic scene, changes in the domestic steel industry and steel imports. 



'Mining engineer, Minerals Availability Field Office, Bureau of Mines, Denver, CO. 



INTRODUCTION 



Iron is the fourth most abundant element, composing 
almost 5 wt pet of the earth's crust. It is estimated that 
world resources of iron ore exceed 800 billion It of crude ore 
containing more than 232 billion It Fe (I). 2 The purpose of 
this report is to identify and define the demonstrated iron 
ore resources in market economy countries (MEC's) 3 and 
evaluate the potential production in its various forms from 
these resources. The data furnished for this study came from 
129 operating mines and known deposits located in 25 
MEC's. 

In a study of this nature it was not possible, nor was 
it intended, to conduct a comprehensive worldwide evalua- 
tion of such an immense resource within the constraints 
of time and budget allocated. Therefore, the scope of this 
study involved the evaluation of technical and economic 
data from operating mines, past producers, and developing 
and explored deposits in the major MEC's. 

The procedure followed for this evaluation was to iden- 
tify recoverable resources and the engineering and economic 
parameters that would affect production from the deposits 
selected for evaluation. Capital investments and operating 
costs (direct and indirect) for the appropriate mining and 
beneficiation methods were estimated, transportation costs 
were assessed, and a cost evaluation for each deposit was 
performed. Finally, the individual deposit evaluations were 
aggregated to show the potential iron ore products available 
at various cost levels. 



Iron ore is the source of primary iron for the iron and 
steel industries that consume about 98 pet of all iron ore 
production. Iron ore is used almost exclusively for the pro- 
duction of pig iron and is the main ingredient of the blast- 
furnace charge. Iron ore is marketed as a number of dif- 
ferent products, and the product forms are based largely 
on physical characteristics. A plethora of brand names and 
physical and chemical specifications exist for iron ore prod- 
ucts. The iron ore products presented in this study are lump 
ore, sinter fines, pellet feed, and pellets. 

The availability curves that have been developed for this 
study show total long tons of iron ore products available 
at a specific total cost per iron unit. The iron unit, which 
refers to the metal content of the ore, is widely used in the 
industry as a basis for determining prices, shipping costs, 
etc. An iron unit may be defined as 0.01 It (1.0 pet) of con- 
tained iron; i.e., 22.4 lb (since 1 It = 2,240 lb). An iron ore 
of 65 pet Fe contains 65 iron ore units per long ton of ore. 
Therefore, the ores are priced on an iron unit basis. 

Several tonnage units are used throughout the report. 
The domestic industry uses long tons (It), while the foreign 
industry frequently uses metric tons (mt). Discussion of 
foreign mines and deposits in the country availability 
section is reported in metric tons, except for the results from 
the availability study. Long tons (It), which are equivalent 
to gross tons, and short tons (st) appear in the report in 
tables and text as information from other sources. 



ACKNOWLEDGMENTS 



The authors wish to thank Frederick L. Klinger, for- 
merly iron ore commodity specialist, Bureau of Mines, Divi- 
sion of Ferrous Metals, and Sylvia J. Arbelbide, formerly 
of the Minerals Availability Field Office, for their 
assistance. 



Production and cost data for domestic deposits were 
developed at Bureau of Mines Field Operations Centers. The 
Bureau's Minerals Availability Field Office, Denver, CO, 
developed foreign production and cost data, performed the 
engineering and economic evaluations on the properties, 
and prepared this report. 



COMMODITY OVERVIEW 



STATE OF THE INDUSTRY 



Annual world iron ore production usually exceeds 800 
MMlt, of which nearly 57 pet is produced in MEC's. The 
trends of iron ore production from 1976 through 1985 are 
shown by country in table 1. Figures for 1984 indicate a 
reversal of a downward trend that began in 1980 with 
nearly an 8-pct increase over 1983 levels. The estimates for 

2 Italic numbers in parentheses refer to items in the list of references at 
the end of this report. 

3 Market economy countries are defined as all countries that are not con- 
sidered centrally planned economy countries (CPEC's). The CPEC's are 
Albania, Bulgaria, China, Cuba, Czechoslovakia, German Democratic 
Republic, Hungary, Kampuchea, Laos, Mongolia, North Korea, Poland, 
Romania, U.S.S.R., and Vietnam. 



1985 show the highest production levels since 1981. Five 
major producing MEC's accounted for 38.7 pet of 1984 world 
production, led by Australia and Brazil at 88.6 MMlt each, 
together accounting for nearly 23 pet of the world total. The 
United States, India, and Canada followed with 6.5, 5.1, and 
4.7 pet, respectively. The U.S.S.R. accounted for nearly 31 
pet of total world production. Total 1984 production in the 
CPEC's was 340.2 MMlt, of which nearly 31 pet (243.1 
MMlt) was from the U.S.S.R. 

During the period 1976-81, U.S. production accounted 
for about 9 pet of total world output. Production fell to 6.5 
pet of world output in 1984 and to an estimated 6.0 pet in 
1985 (1). Production increased in 1984 from 1983 levels in 
most countries, with the United States showing a 36-pct 
increase. 



Table 1.— World iron ore production 

(Million long tons) 



Country 1976 

MEC's: 

Australia 91.8 

Brazil 90.4 

Canada 56.1 

France 44.5 

India 42.3 

Liberia 18.5 

South Africa, 

Republic of NA 

Sweden 30.0 

United States 80.0 

Venezuela 17.9 

Others 92.3 

Total MEC's 

CPEC's: 

China e 

U.S.S.R 

Others 

Total CPEC's 

Total world 881.0 

e Estimated. NA Not available. 



1977 



1978 



1979 



1980 



1981 



1982 



1983 



1984 



1985 e 



94.6 


81.9 


87.6 


94.0 


84.6 


86.4 


72.8 


88.6 


90.0 


86.0 


84.0 


86.0 


104.3 


98.4 


108.3 


87.6 


88.6 


95.0 


55.4 


41.1 


60.3 


48.0 


49.9 


41.2 


33.0 


37.2 


38.0 


36.1 


32.9 


31.2 


28.5 


21.3 


19.1 


15.7 


14.8 


14.0 


41.6 


37.6 


45.0 


40.0 


40.5 


40.3 


38.2 


40.4 


42.0 


17.9 


18.5 


20.0e 


17.1 


19.4 


17.9 


14.7 


14.9 


15.0 


NA 


NA 


31.1 


25.9 


27.9 


24.2 


16.3 


24.1 


23.0 


25.0 


21.1 


26.2 


26.8 


22.9 


15.9 


13.0 


17.8 


23.0 


55.8 


81.5 


85.7 


69.6 


73.2 


35.4 


37.6 


51.3 


48.0 


14.2 


13.4 


16.0 


15.8 


15.3 


11.5 


9.6 


12.5 


14.0 


96.9 


93.0 


93.9e 


73.3 


71.4 


67.1 


57.2 


59.0 


57.0 



563.8 


523.5 


505.0 


583.0 


543.3 


524.8 


467.3 


395.7 


449.2 


459.0 


64.0 

235.2 

18.0 


64.0 

233.9 

22.6 


69.0 

237.0 

22.6 


73.8 
238.2 
22.9e 


73.8 

241.1 

15.4 


69.0 
238.2 

15.3 


68.9 

240.1 

14.3 


70.0 

241.1 
22.8 


74.0 

243.1 
23.1 


75.0 

242.0 

23.0 


317.2 


320.5 


328.6 


334.9 


330.3 


322.5 


323.3 


333.9 


340.2 


340.0 



844.0 



833.6 



917.9 



873.6 



847.3 



790.6 



729.6 



789.4 



799.0 



The world iron ore industry has been plagued with a 
number of major problems since 1974. A combination of 
formerly high energy costs, declining demand, increased 
competition, and overcapacity have been the root causes of 
the current dilemma within the industry. The immediate 
outlook continues to portray an excess of capacity compared 
with the demand for iron ore. Table 2 illustrates the utiliza- 
tion of the marketable iron ore production capacities of the 
10 largest MEC iron ore producers during 1982. 

Improvement in the quality of iron ore entering the in- 
ternational trade is likely to continue. This trend, however, 
is expected to diminish as technical and cost factors even- 
tually will limit the degree to which the iron content of ore 
can be improved. 

Investment cost projections on individual projects have 
been severely impacted by inflation. Cost escalations of 50 
to 100 pet within a period of 18 to 24 months have been 
experienced. Since it takes several years to plan, construct, 
and bring a new iron ore project on line, the impact infla- 
tion could have on the final cost of a project is enormous. 
The expense of complying with environmental regulations, 
particularly in the developed areas like North America, has 
also had a costly effect on the iron ore industry. Even in 
developing countries, environmental considerations are 
beginning to impact iron ore operations. Labor costs have 
also played a role in the worldwide economics of the iron 
ore industry, particularly in the United States, Europe, 
Republic of South Africa, Canada, and Australia. 

Also, overcapacity within the steel industry due to lower 
demand in the United States and the European Economic 
Community (EEC) has forced closure of some blast furnaces 
and steel mills. The major factors affecting the low U.S. 
utilization have been the heavy penetration of foreign steel 
into U.S. markets, a lower usage of steel by the depressed 
automobile and construction industries, and the increasing 
use of scrap in electric arc furnaces. 

To further compound the problem of excess plant capac- 
ity, the developing countries, which furnish nearly half of 
the total world supply of iron ore to the developed countries, 
are now developing ambitious steel industries of their own. 
The rapid growth of crude steel production in these coun- 
tries is in sharp contrast to the stagnation of production 
in the developed nations. Production of steel in developing 
countries more than doubled from 31 Mmt in 1972 to 65 
Mmt in 1981. During the same period, production in the 
developed countries decreased by nearly 3 pet, from 403 to 



Table 2.— Utilization of mine capacity in the 10 
largest MEC iron ore producing nations, 1982 

Country Ca ^i ty ' Utilization, 

' MMIt pet 

Australia 124.3 69.5 

Brazil 119.2 90.9 

Canada 62.3 66.1 

France 27.5 69.5 

India 58.1 69.4 

Liberia 21.4 83.6 

South Africa, Republic of 34.8 69.5 

Sweden 28.8 55.2 

United States 93.2 38.0 

Venezuela 23.5 48.9 

Total or wtd av 593.1 67.5 

Source: American Iron Ore Association. 



392 Mmt. The share of Western World crude steel produc- 
tion from the developing nations in the 10 yr prior to 1981 
rose from 8 pet to 17 pet. The significance of the develop- 
ing countries' contribution to overall steel production in the 
Western nations will affect the demand and consumption 
of iron ore in other Western nations. 

Several factors have profoundly influenced steel produc- 
tion in the industrial nations. Foremost were the rapid 
development of continuous casting techniques, which in- 
crease the yield of finished steel, and the increasing number 
of electric arc furnaces that produce steel mainly from scrap 
rather than from ore. In addition, there were important 
changes in the type of steel being consumed and techno- 
logical improvements in steel utilization. This resulted in 
the reduction of steel consumption in building and civil con- 
struction and vehicular manufacturing industries. 

The smelting of iron ore into pig iron in blast furnaces 
is the most common ironmaking method. The reduction of 
iron ore into sponge iron or direct reduced iron (DRI) only 
amounts to 1 to 2 pet of world output. 

The direct reduction (DR) process normally uses 
relatively pure lump ores or high-grade pellets. Even though 
the number of DR plants is increasing, the impact of this 
process on the world iron ore market is not yet significant 
except for some domestic markets in Venezuela, Mexico, and 
Indonesia. In the future, however, DR's market importance 
will be somewhat greater as additional plants are built. 
While most current DR plants are in developing countries 
where there is an abundance of inexpensive natural gas, 
there have been closures of some DR plants in developed 
countries due to high fuel costs. 



Another commodity that influences the demand for iron 
ore in the steel industry is the availability of ferrous scrap. 
Ferrous (iron and steel) scrap is used as the major metallic 
charge to U.S. electric steelmaking furnaces (electric arc 
furnaces or EAF) and averages about 27 pet of the metal 
charge to basic oxygen furnace (BOF) steelmaking furnaces. 
One long ton of ferrous scrap, based on iron content, is 
equivalent to about 1.6 It of iron ore. With the electric arc 
furnace requiring virtually no pig iron, the amount of pig 
iron and therefore iron ore required to produce the same 
amount of steel has decreased. Since 1970, the scrap in- 
dustry has risen from 15 pet to 27 pet of the total steel in- 
dustry and is estimated to represent more than 32 pet by 
the end of the 1980's. In addition, when scrap prices are 
low, a reduction in the demand for iron ore generally occurs. 

The improved yield of rolled steel per ton of raw steel 
through the increased application of the continuous casting 
process has been another technical improvement that has 
reduced the demand for iron ore. In 1984, the U.S. steel in- 
dustry processed 40 pet of its molten steel in continuous 
casting, compared with 72 pet in Japan, 88 pet in Italy, and 
32, 48, and 51 pet in France, the Federal Republic of Ger- 
many, and the United Kingdom, respectively. Within the 
past 10 to 12 yr the U.S. steel industry's total energy con- 
sumption has been reduced by 50 pet and its energy effi- 
ciency has improved by 25 pet, according to the American 
Iron and Steel Institute. This improvement is attributed to 
energy savings in continuous casting by bypassing a 
number of energy-intensive operations including gas-fired 
soaking pits. The yield of salable products from molten steel 
is also increased, resulting in less energy consumed in 
resmelting and reprocessing internally generated scrap. 
Along with the greater use of agglomerates, which has 
enhanced blast furnace efficiency, the ratio of total iron ore 
consumption to pig iron production was reduced from 1.83 
in 1960 to 1.76 in 1980 as a result of improvements in ore 
grade and ore processing efficiencies. 

The probable demand for iron in ore in the United States 
is expected to reach 55 MMst in 1990, assuming an average 
growth rate of 3 pct/yr from 1983 through 1990. Concur- 
rently the rest of the world demand for iron in ore is ex- 
pected to be 520 MMst in 1990, an average annual growth 
rate of 3.1 pet (2). 

The crude steelmaking capacity in the developing coun- 
tries could increase to 110 Mmt by 1987-88 from a level of 
33 Mmt in 1973-74, according to an October 1982 estimate 
by the International Iron and Steel Institute (3). Conversely, 
there will be a decrease in crude steelmaking capacity in 
the industrialized countries, with the possible exception of 
Japan. The North American steel industry, and particularly 
that of the United States, will be forced to make major im- 
provements in order to compete with the cheaper steelmak- 
ing capability of the developing nations. 



ECONOMIC IMPACT OF GOVERNMENT- 
CONTROLLED OPERATIONS 

In many of the iron ore producing countries, Govern- 
ments control much of the iron ore production through full 
or partial ownership of the mines. Brazil, Chile, France, In- 
dia, Liberia, Mauritania, Mexico, Norway, Peru, Republic 
of South Africa, Sierra Leone, Sweden, and Venezuela are 
some of these countries. Theoretically, Government par- 
ticipation ensures that the benefits derived from capitaliz- 
ing on a country's resources are received by that country. 



Consequently, this control can create distortions in the 
traditional market economics of iron ore production for both 
domestic and export markets. 

Iron ore is a major source of foreign exchange for some 
developing countries. The foreign exchange is needed to pay 
for imported goods and to further develop the countries' 
economics. In the quest for more foreign exchange, develop- 
ing countries tend to increase their level of exports of iron 
ore to obtain more revenues. As the demand for ore declines, 
this increase in production adds to the already existing prob- 
lems of oversupply and depressed prices for iron ore. Conse- 
quently, Government owned or controlled mining opera- 
tions in less developed countries may maintain production 
levels in order to obtain foreign exchange earnings, which 
may result in large losses in terms of U.S. dollars. The ef- 
fect, though, continues to weaken the market for their own 
product. 

Another economic effect of Government ownership or 
control is that iron ore companies that are not operating 
profitably are still able to stay in business through Govern- 
ment support. The Swedish iron ore mines have been in 
serious financial trouble for a number of years and are being 
supported by the Government. Sydvaranger, a Norwegian 
iron ore mine, has been receiving grants from the Govern- 
ment for many years. In France, most iron ore mines are 
assisted by the Government, partly to ensure a supply of 
ore for its domestic steel industry but especially to main- 
tain employment. The Peruvian Government provided ex- 
port tax relief on sales by granting an exemption on the 
17.5-pct export tax in late 1980, which enabled the Mar- 
cona property to show an artificial profit for that year. In 
all of these cases, there are reasons other than profit con- 
siderations for keeping the mines open. 



INTERNATIONAL TRADE 

The percentage of world iron ore that is traded inter- 
nationally rose from about 30 pet in 1961 to about 42 pet 
in 1980 and remained about the same in 1983 and 1984. 
The total international trade volume reached a high of 
about 373 MMlt in 1979 (4). 

In 1985, six nations accounted for more than 80 pet of 
iron ore exports. Similarly, three consumers— Japan, the 
EEC countries, and the United States as a distant third- 
import over 80 pet of the iron ore traded on the interna- 
tional market. Figure 1 shows the major exporting and im- 
porting countries of iron ore in the international market; 
figure 2 shows the world trade pattern for the early 1980's. 

Import penetration of foreign iron ore into the United 
States is mainly limited to the U.S. Atlantic and gulf coasts 
and the Great Lakes. Factors that limit import penetration 
are port depth and size of locks into the lakes, causing only 
smaller ships to transport ore, thus creating higher ship- 
ping costs. The Japanese steel industry relies on imported 
ore because Japan has virtually no iron ore resources. The 
European steel industry (excluding Scandinavia), however, 
was originally established to use local ores. Due to the 
marginal quality of the ores, which grade mostly between 
25 and 35 pet Fe, and the associated increased costs for pig 
iron production, the EEC countries now import about 80 
pet of their required iron ore. Imports of iron ore vary from 
one country to another. France only imports about 50 pet 
of its requirements, with the rest of its needs met by 
domestic production, but the Federal Republic of Germany, 
the Netherlands, and Italy each import over 90 pet of their 
iron ore. 



EXPORTERS 



IMPORTERS 



Republic of 

South Africa 

4 pet 




United States 
3 pet 
Republic of 
South Korea 

4 pet 




1985 trade ; 305 million metric tons 
Figure 1.— Major exporters and importers of iron ore in the international market in 1985. 





























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- 10 Mi 


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5,000 
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=i I0-K 
]>I0( 


XDMmt 
) Mmt 




Scow, km 





Figure 2.— World iron trade pattern, early 1980s. 



Taken as a group, the developing countries constitute 
only 9 pet of the world raw steel capacity yet make up 40 
pet of the total global iron ore production capacity (5). One 
of the policy aims for a number of developing countries is 
to try to establish or expand their steel industries. This is 
based on the premise that the development of a steelmak- 
ing industry will have a profound impact on the entire in- 
dustrial and social development of the country. This trend 
is reflected in the rapid increase in iron ore consumption 
in the developing countries, which averaged 5.7 pct/yr in 
the 1970's. In contrast, the consumption of iron ore in the 
developed countries decreased at a rate of 0.7 pct/yr (6). 

Contracts covering a relatively long period of time con- 
stitute the major share of all iron ore transactions between 
the steel mills and their supplying mines. The Japanese and 
European (EEC and Eastern European countries) steel in- 
dustries meet about 90 pet of their import requirements 
under this type of arrangement. The balance represents 
sales on the spot market or under relatively short term 
contracts. 

The steel producers have established very close relation- 
ships with most iron ore mines that assure the steel pro- 
ducers of a stable source for their ore. In the past, large con- 
sumers have reduced their supply risk through direct in- 
vestment in additional mines and/or long-term contracts 
with other mines, resulting in a diversification of sources 
for iron ore. In addition, buyers have assured themselves 
of a more than adequate supply of iron ore by offering long- 
term contracts or establishing partial ownership with the 
mines. Such guaranteed markets have been necessary for 
the mine owners and their financial backers to justify the 
large investments needed to develop the mines. 

In the past, under the long-term supply contracts, the 
iron ore industry was able to achieve and develop a healthy 
growth based upon anticipated demand. However, in recent 
years, a gradual reduction of the stability provided by these 
long-term arrangements has been witnessed. In many cases 
the steel mills accept only 60 to 70 pet of basic contractual 
tonnages, making the usual 10-pct quantity variation 
clauses appear meaningless. This has increased the ten- 
dency to achieve wider quantity margins and shorter con- 
tract durations. The persistence of this trend, coupled with 
the apparent latitude in approach to the quantity margins, 
can result in the diminishing value of these contracts with 
adverse effects on the mining operations and the shipping 
industry. 



INTERNATIONAL TRANSPORTATION 

The iron ore mines in many countries export much, if 
not all, of their product, and most of this is traded via ocean 
routes. In the world seaborne trade, iron ore is one of the 
most important dry cargo commodities and has grown rap- 
idly since the mid-1960's. Shipments rose from 152 Mmt 
in 1965 to 330 Mmt in 1974— equivalent to an average 
growth of about 9 pct/yr (7). During those years many mines 
were developed with the export market in mind, and the 
resulting world iron ore trade patterns changed con- 
siderably. Accompanying this change in trade patterns was 
an increase in the size of ships used to haul iron ore, the 
necessity to develop port facilities that would accommodate 
the large ships, and an increase in the average length of 
ocean shipping distances. 

Most of the iron ore mines that export ore are located 
in different continents than the steel mills to which they 
sell their ore. Many of the mines that sell in the export 



market produce very large quantities of iron ore products 
that have a relatively low unit value. Hence, it is necessary 
to have a transportation system capable of handling the 
large tonnages and vast distances in a very inexpensive 
manner. Table 3 shows locations and capacities of iron ore 
exporting ports that were used in this study. 

Table 3.— Location and capacities of iron ore exporting ports 



Continent and 
country 



Port name 



Capacity, 
DWT 



Africa: 

Algeria 



Cameroon . 
Gabon 
Ivory Coast 
Liberia 



Mauritania 



Annaba 
Tarfoya 

Kribi 

Santa Clara 
San Pedro . 
Buchanan . 
Monrovia . . 
Nouadhibou 



Senegal Sedar 



Sierra Leone 

South Africa 

Asia: India 



Europe: 

Norway . 



Portugal 

Spain 

Sweden 

North America: Canada 



Oceania: Australia 



South America: 
Brazil 



Pepel 
Saldanha Bay . . 

Mangalore 

Mormugao 

Vishakhapatnam 

Narvik 

Kirkenes 

Seixal 

Almeria 

Lulea 

Port Cartier .... 
Pointe Noire . . . 

Sept-lles 

Dampier 

Port Latta 

Port Hedland . . . 

Port Walcott 

Whyalla 



Chile 



Peru 

Venezuela 



Ponta do Ubu . 
Rio de Janeiro. 

Sepetiba 

Tubarao 

Guacolda 

Guayacan 

Huasco 

San Nicolas . . . 

Palua 

Puerto Ordaz . . 



e 100 

e 90 

e 100 

e 150 

e 200 

85 

85 

110. 

e 200. 

100. 

300. 

60, 

1 50. 

1 50, 

350. 

125. 

e 100, 

90, 

60, 
125, 

75, 
230, 
200, 

95, 
225, 
265, 

70, 

200, 
40, 
250, 
300, 
160, 
170, 
160, 
170, 
70, 
100, 



,000 
000 
000 
,000 
000 
000 
000 
000 
000 
000 
000 
000 
000 
000 

000 
000 
000 
000 
000 
000 
000 
000 
000 
000 
000 
000 
000 

000 
000 
000 
000 
000 
000 
000 
000 
000 
000 



e Estimate for proposed port. 

1 Up to 150,000 DWT can be loaded in deeper water. 

Source: Cargo Systems Research, Ports of the World. 



Transportation, as an element of ore price, constitutes 
a large part of the cost of iron ore. Rates for ocean shipments 
of iron ore are dependent upon a number of variables. 
Among these variables are the size of the vessel, the design 
of the vessel to handle joint cargos with the ore or to 
backhaul or crosshaul some other cargo (such as oil or grain) 
during some segment of its journey, the nature and capacity 
of loading and unloading facilities at different ports, the 
ownership of the vessel, competition for cargo space at any 
given time, and terms of the contract. In general, a "spot" 
shipment (short-term contract) in a fairly small vessel can 
cost several times more on a per-ton basis than shipment 
in a large vessel under a spot or long-term contract. Around 
90 pet of international iron ore trade is under long-term con- 
tracts. Figure 3 shows the wide range and variability of 
ocean freight rates for various routes in the early 1980's. 

The use of larger vessels has become more and more 
common in the international shipment of iron ore because 
of large volumes of ore and the need to reduce unit cost. 
Routine loading of vessels in the 100,000- to 200,000-DWT 
classes is common in Brazil and Australia, with some cargos 
even larger. Deadweight tonnage (DWT) is the carrying 
capacity of a vessel in long tons and is measured as the dif- 
ference between the ship's weight and its displacement 



18 
16 
14 

12 

+- 
E 

"** 10 



KEY 

Australia to Europe 
Brazil to Asia 
Brazil to Europe 
Australia to Asia 
Canada to Europe 




1980 



1981 



1982 



1984 



1983 
YEAR 
Figure 3.— Ocean freight rate fluctuations, early 1980s. 



I985 



1 986 



when loaded. The development and use of large ships has 
enabled iron ore to be transported at very low costs. It is 
not unusual for large users and large shippers of iron ore 
to both own and operate their own vessels. For larger vessels 
the cost per ton of iron ore transported will decrease because 
the added expenses due to size are small relative to the ex- 
tra capacity. The cost decreases are due to lower capital 
costs, per ton of capacity, less required horsepower per DWT, 
and fewer required crew members per DWT. 

Many ships are of the combined carrier configuration, 
and about 60 pet of them are at least 100,000 DWT. In fact, 
most major volume long-haul trade routes are open to the 
150,000- to 200,000-DWT size ships. These ships are either 
oil-bulk-oil (OBO) or ore-oil (O/O) carriers. This facilitates 
backhauling of cargos more effectively, resulting in higher 
use rates and more competitive pricing structures. More 
shipments of bulk cargos, such as oil, ore, coal, and grain, 
are moved from the Atlantic Basin to the Pacific Basin than 
the reverse. As a result, there is a tremendous competitive 
pressure on many dry bulk carriers to secure backhaul 
cargos from Austrialia and the Far East. Thus, it is possi- 
ble for countries like Australia to ship iron ore and baux- 
ite to Europe at much cheaper rates than generally accepted 
for the distance involved. 

Ocean transport costs for iron ore are a function not only 
of the size and type of vessels used but also of the time taken 
to load and discharge, as well as of the distance over which 
the product is transported. The type and efficiency of the 
port facilities available at either end of an ocean transport 
leg affect all other factors except the shipping distance. 
Generally, it is not feasible to develop large iron ore loading 
facilities at existing ports because of such factors as mine 
location, limited available water depth, unsuitable or in- 
adequate infrastructure, and congestion. The construction 
costs of port facilities are high and include the costs of dredg- 
ing to obtain and maintain the necessary water depths. 

Japan and Western Europe have the great majority of 
the existing large carrier ports receiving iron ore imports. 
Since the mid-1960's, many steel mills have been built in 
locations adjacent to iron ore discharging terminals on the 



coasts. Most of the large carrier ports are controlled by the 
steel companies, and incoming raw materials are usually 
discharged directly to adjacent coastal steelworks. However, 
in the Federal Republic of Germany, for example, imports 
are barged up the Rhine River to the steel mills. There are 
also transshipment terminals (which transfer cargo from 
large, deep-draft, ocean vessels to rail cars or to smaller, 
shallower vessels capable of river navigation) for iron ore 
cargos, the majority of which are located in Western Europe. 
Facilities of this type are owned either by inland steel 
manufacturers or by stevedoring companies specializing in 
iron ore. 

The iron ore ocean freight industry is not a fully com- 
petitive market. Iron ore is generally transported under un- 
published long-term charter arrangements. In addition, 
major steel companies have ownership or control in many 
of the companies that ship iron ore, and some quoted freight 
rates are simply intercompany book entries. Buyers of ship- 
ping services, normally the steel producers, can influence 
freight market developments without resorting to direct in- 
vestment in shipping. They can promote investments by in- 
dependent operators or subsidiaries by entering into charter 
arrangements of sufficient duration to allow capital amor- 
tization of the vessels within the contract period. They can 
also discriminately award contracts with freight rates that 
are initially favorable to the shipping company even before 
a ship is constructed. This way they can avoid direct invest- 
ment and insure an adequate supply of ships and estab- 
lished shipping costs. Because some of the ships are so large 
and are also specialized, they can be accommodated at com- 
paratively few ports. This severely restricts their ability to 
be used to carry other cargo when iron ore is not available. 

Depressed iron ore market conditions continue to affect 
the ocean freight industry, especially the large bulk car- 
riers. Due to the present weak demand for iron ore and an 
oversupply of ships, major changes will have to take place 
in order to restore the steel or shipping industry market 
equilibrium. However, some additional large bulk carriers 
are still being built, making it more difficult to reach 
satisfactory trading conditions for shipowners. 



INLAND SHIPPING 

About two-thirds of the iron ore products imported into 
the United States are from Canadian mines and are re- 
ceived at the Great Lakes ports. The remainder are off- 
loaded at a few ports on the east coast and gulf coast. The 
major problems with the importation of iron ore into the 
United States are the berth and channel draft limitations 
that limit access to lake ports almost exclusively to vessels 
of 65,000 DWT or less. 

An extremely large volume of material is moved over 
the Great Lakes, including 80 pet of the raw materials 
needed for steelmaking. The lakes and connecting water- 
ways between the railheads and mills form one of the coun- 
try's most effective transportation systems. Due to the im- 
pact of transportation charges and different markets, iron 
ore from the Great Lakes area is not cost-competitive with 
overseas ores unloaded on the gulf coast or the east coast 
of the United States. 

Ships used in the Great Lakes trade (Lakers) are dif- 
ferent from those used in ocean trade. They are long and 
narrow with a comparatively shallow draft, have a max- 
imum size of about 60,000 DWT, and are designed to pass 
through the locks on the waterways between the lakes. The 
new iron ore carriers on the Great Lakes are exclusively 
self-unloading. The ships unload via self-contained conveyor 
systems and are able to do so quickly, inexpensively, and 
at offloading points where facilities are minimal. They can 
also unload directly into waiting rail cars or river vessels, 
thereby reducing turnaround time and saving on additional 
handling costs. 



PRICE STRUCTURE 

Japanese and European steelmakers dominate the 
market for iron ore, and, to a great extent, control the iron 
ore prices. Individual steelmakers normally do not negotiate 
their own contracts; most negotiations are done through 
industry-oriented buying organizations. Steel mills, 
however, have their own individual iron ore specifications 
that govern the negotiations for various ore products. 

Iron ore accounts for only 10 to 15 pet of the total cost 
of steelmaking, and iron ore prices have little correlation 
with the price of iron and steel and the fluctuations of the 
iron and steel industry. Because of geographic locations and 
volume of sales, quality of ore, and type of product, 
Australia and Brazil are the price leaders for the iron ore 
exporting countries. Most of the iron ore is bought by 
multiyear contracts on a tonnage basis, with renegotiation 
of prices normally done annually. 

Iron ore is not a homogenous commodity with respect 
to chemical composition or physical form. Consequently, 
pricing methods are complex to reflect these characteristics. 
An ore with a specific quality (includes grade, deleterious 
substances, size, etc.) will have a small price range. Prices 
are established on an iron unit basis. This price is derived 
through an agreement between the seller and the consumer 
on a unit price per iron unit basis and is not officially fixed 
(8). 

On the international market the price for iron ore is 
usually a negotiated free on board (f.o.b.) price. However, 
there are some exceptions to this, such as Venezuelan, 
Brazilian, and Australian ore being sold cost and freight 
(c&f). The delivered price, or cost, insurance, and freight 
(c.i.f.) price, is usually the price from which the f.o.b. price 
is derived, and is the price with which the steel producers 



are basically concerned. The prices for c.i.f. and c&f tend 
to be equal in a given market for similar products (9). Iron 
ore buyers will generally negotiate contract prices for iron 
ore to be equal to other ores of a similar quality to their 
consumers. The f.o.b. price is then artificially determined 
by subtracting the estimated ocean freight cost from the 
c.i.f. price; it is used as a basis for reimbursement to the 
producer. Hence, transportation costs are actually borne by 
the producer. Differences in c.i.f. prices between various iron 
ores delivered to a particular steel mill are, therefore, due 
to differences either in quality of type of ore or in the type 
of contract and date of negotiation, or in shipping cost. 

The prices on the international market do not govern 
the domestic prices for ore that is sold internally. Mexico, 
Venezuela, and other countries sell iron ore for use inter- 
nally, especially to Government-owned mills. This is 
somewhat true for the United States. The domestic ore 
prices are based on the Great Lakes price schedule as a 
reference point that governs both merchant and captive 
transactions. These prices, however, are only for the Lake 
Superior ores and do not necessarily govern prices of ore 
produced elsewhere in the United States. The pricing 

Table 4.— Domestic iron ore prices 

(Per gross ton of 51.50-pct-Fe natural ore, delivered at rail of vessel 
Lower Lake port) 



Mesabi non-Bessemer 

Coarse 

Fine 

Old Range non-Bessemer . . . 
Manganiferous 

Pellets, per natural 
long ton iron unit .555 

NA Not available. 

Source: Skillings' Mining Review. 



Table 5. — International iron ore prices, 1984 



December 


December 


December 


1977 


1980 


1984 


$21.18 


$28.50 


$30.03-31 .58 


21.98 


NA 


NA 


20.73 


NA 


NA 


21.43 


28.75 


NA 


21.43 


24.55 


32.78 



.805 



.66-.869 



Market and 
supplier 


Product 


Price, 
$/Fe unit 


European market: 1 

Australia 2 


Fines 

Lump 

Fines 


0.33 


Brazil 


.36 
.26 


Canada 

South Africa, Republic of . . . 

Sweden and Norway 


Pellets 

Concentrates . . . 
Fines 


0.34-36 
.27 
.21 


Lump 

Pellets 

Fines 


.24 
.37-39 
.27-.29 


Venezuela 2 

West Africa 


Fines 

Fines . . 


.33 
.24-.28 


Japanese market: 3 
Australia 


Fines 


.26 


Brazil 


Lump 

Fines 


.31 
24-.25 


Canada 

Chile 


Pellets 

Lump 

Fines 

Fines 


.20 
.24 
.23 

.21 


India 

Liberia 


Lump 

Pellets 

Fines 

Lump 

Fines 

Iron sand 

Fines 


.23 

".35 

.20-.26 

.26-.30 

.22 


New Zealand 


4 .19 


Peru 


.20 


South Africa, Republic of . . . 


Pellet-fines 

Fines 


.20 
.24 


Lump 


.27-.28 



1 Price is dollars per It Fe unit, f.o.b. unless otherwise noted. 

2 c&f. 

3 Price is dollars per mt Fe unit, f.o.b. unless otherwise noted. 

4 1983 price. 

Source: TEX Report, Bulk Shipping Costs and Commodity Markets. 



schedule used on the Great Lakes is based on the price of 
ore delivered at "Lower Lake port," or "Upper Lake port," 
or "delivered rail of vessel, Lower Lake port." The published 
prices are set at the given receiving port regardless of the 
distance between the shipping and receiving port. Even 
though the Lower Lake pricing system was developed when 
the United States imported very little iron ore, it has a 



strong bearing on current prices paid for South American 
and African ores. 

Table 4 gives some domestic prices in 1984 for various 
iron ore products. International iron ore prices are given 
in table 5 and are shown for the two major markets of iron 
ore products, Europe and Japan. Note that some of the 
prices are based f.o.b., while others are on a c&f basis. 



IRON ORE RESOURCES AND PROCESSING 



GEOLOGY 

The major forms of iron worldwide, as classified by their 
chemical composition, are hematite, magnetite, goethite or 
limonite, siderite, and, rarely, pyrite. Hematite, magnetite, 
and goethite, all iron oxides, are the three most common 
iron ore minerals. Some deposits of siderite (iron carbonate), 
pyrite and pyrrhotite (iron sufides), and chamosite (an iron 
silicate) are mined but are of minor economic importance 
at the present time. Mineral impurities exist in any iron 
ore and are relevant to the discussion of the nature of iron 
ore. Typical gangue minerals are quartz, iron silicates, 
calcium-magnesium iron carbonates, clay minerals, apatite, 
and manganese oxides. 

There are many different types of iron ore deposits, but 
the vast majority of them can be classified as either bedded 
sedimentary deposits or massive deposits. Bedded deposits 
in Precambrian rocks, called banded iron formations (BIF's), 
are by far the most important sources of iron ore. Occur- 
rences of these deposits are predominantly in the Precam- 
brian Shield areas of the world. BIF's are thinly bedded 
chemical sediments containing at least 15 pet Fe and nor- 
mally containing chert layers. The BIF's are usually fold- 
ed and have low to steep dips. Thicknesses normally average 
a few hundred feet but may range from less than 25 ft to 
more than 2,000 ft. The beds are exposed in belts ranging 
from a few miles to several hundred miles in length, 
although distances of a few tens of miles are more common. 

The term "taconite" is a local term used in the iron- 
bearing district of the Mesabi range in the Lake Superior 
Region of the United States. Generally, taconites are bedded 
ferruginous charts of extremely hard ore in which the iron 
is in either banded or well-disseminated form containing 
hematite, magnetite, carbonate, or silicates, or a combina- 
tion of these. Since World War II it has been considered a 
low-grade iron formation suitable for concentration of 
magnetite and hematite, from which pellets containing 62 
to 65 pet Fe can be made. Deposits in BIF's with iron con- 
tents about 25 pet that are amenable to beneficiation are 
considred taconite-type deposits. The taconite ores are low- 
grade deposits containing 15 to 35 pet Fe and 40 to 55 pet 
Si0 2 . 

Most North American iron formations contain 30 pet 
or more total iron, 60 to 80 pet of which is economically 
recoverable. South American itabirites are usually richer 
in iron content than those in North America, grading about 
40 pet Fe. Itabirite is a laminated, metamorphosed iron for- 
mation in which the iron is present as thin layers of 
hematite, magnetite, or martite. The term was originally 
applied in Itabira, Brazil, to a high-grade massive specular- 
hematite ore (66 pet Fe). Metamorphism has sometimes 
caused a coarsening of the grain size, which has improved 
the beneficiation qualities of the deposits. Billions of tons 



of ore containing more than 64 pet Fe are in the Brazilian 
itabirite formations, with some deposits containing almost 
pure hematite. 

Oolitic ironstones of Paleozoic to Cretaceous age com- 
prise another class of bedded iron deposits of regional im- 
portance in the Southeastern United States, Western 
Europe, and North Africa. They differ from the BIF's in 
that, although they are laterally extensive, they are usually 
less than 50 ft thick and usually average only 25 to 35 pet 
Fe. The ore consists of very fine grained hematite, quartz, 
chamosite, and siderite in varying proportions and is 
usually high in phosphorus. On a global basis, the relative 
significance of these ores is small. 

Iron occurs in several types of massive deposits found 
mainly in tectonically deformed belts of the earth and 
associated with igneous intrusions. The most important 
types appear to be magmatic segregations, and injection, 
sedimentary, and extrusive deposits. Grades of iron ore 
range from about 30 pet to 65 pet Fe. Some of these deposits 
contain minerals of copper, titanium, phosphorus, vana- 
dium, or other metals that may be produced as byproducts. 
Most of the apatite presently produced in Sweden is 
recovered from iron ore tailings. In the past, gold has been 
produced from iron ore operations in Minas Gerais in Brazil. 
Copper, cobalt, minor amounts of nickel, and unspecified 
amounts of gold and silver occur in the ore at Hierro, Peru. 
Manganese, cobalt, phosphate, copper, gold, and silver have 
all been recovered from domestic iron ore operations. 

Clastic accumulations of magnetite in beach sands are 
a minor source of ore and usually contain titanium. Another 
minor source of ore is river bed deposits containing 
titanium. Another minor source of ore is river bed deposits 
containing goethite, such as the Robe River deposit in 
Australia. Iron ore also occurs as laterites formed in tropical 
areas. The use of laterites as a iron ore is limited because 
of major impurities such as clay, chromium, cobalt, and 
nickel. In addition to laterites, other residual deposits are 
also formed by weathering of iron-rich rocks that formed 
the Mesabi range direct shipping ores and the ore at Schef- 
ferville in Canada. 

Manganese and titanium occur along with iron in 
deposits in many countries around the world. The pellets 
at Wabush in Canada are produced from an ore that has 
a high manganese content. Concentrates from 
titanomagnetite beach sands are produced to provide the 
basis for the iron and steel industry in New Zealand. India 
produces a substantial amount of manganiferous iron ore 
used for blast furnaces. These types of deposits were in- 
cluded in the study if the iron ore was of sufficient quality 
and the magnetite or titanium was of a relatively low grade. 
Manganiferous and titaniferous iron ores are more impor- 
tant to the manganese or titanium industries and therefore 
were not evaluated in this study. 



10 



IRON ORE MINING 

Iron ore mining systems for mines evaluated in this 
study are generally all open pit; the most notable excep- 
tions are the underground mines of northern and central 
Sweden. Mining methods are essentially the same for 
foreign and domestic iron ore. Computer technology has 
been incorporated into many of the mining and beneficia- 
tion processes to increase efficiency and reduce personnel 
requirements. 

While conventional ore breakage, employing drilling 
and blasting variations, is most universally used, several 
other unique systems are being utilized in some of the 
mines. In New Zealand, water-jet drilling is used to loosen 
the iron sands of the Waipipi deposit. After the 130-ft-thick 
deposit is loosened by the high-pressure water jets, the ac- 
tual mining is then carried out by dredging or scraping 
along an 800-ft face. 

Marampa in Sierra Leone (west Africa) is yet another 
mine using unique systems of ore recovery. The mine has 
been brought on line again after a 7-yr closure. Conven- 
tional bench mining is practiced, while the "tailings pond 
ore" is mined with a dredge. The dredge digs to a depth of 
33 ft with a 14-in-diam suction head. This secondary ore, 
produced at a rate of 1.35 Mmt/yr, is then pumped to the 
concentrator. The "tailings pond ore" contains 40 Mmt of 
28.6 pet Fe. 

The Savage River Mine in Tasmania employs mining 
practices, some of which are normally confined to 
underground operations. Due to the complex geology of the 
ore body, very stringent pit control is required, including 
rockbolting, special terminal blast conditions, and pit 
dewatering. Heavy rainfall in the area of 2,000 mm (79 in) 
annually requires that the pit be designed with a 2-pct grade 
to assure proper drainage into the Savage River. Pumping 
of the pit will be required for the final four benches as the 
pit will be below the level of the river. 

The Sishen Mine in the Republic of South Africa is one 
of the largest open pit mines in the world, with a future 
potential of expanding into underground production as well. 
Due to rising fuel costs, a trolley-assisted truck operation 
was tested and installed for full operation in 1984. A 20-pct 
decrease in diesel fuel consumption has occurred with this 
computer-controlled trolley system. 

The Swedish mining industry has been long recognized 
as a leader in new methods, new equipment, and innovative 
mining practices throughout the world. The underground 
rail haulage system at the Kiruna Mine is operated from 
one central underground control room. The operator has 
complete control over all the ore chutes, loading points, and 
unloading of a completely automated rail system. Monitor- 
ing of the system is done by strategically placed television 
cameras with the television screens located in the control 
room. Kiruna employs a sublevel caving method, as does 
the Malmberget Mine, which is one of the largest 
underground mines in the world, and the second largest 
mine in Sweden. Prior to converting to sublevel caving, the 
mine also employed room-and-pillar and shrinkage stoping 
mining systems. A major problem associated with the 
sublevel caving mining method is the resultant subsidence 
effects on the surface environment. In the case of the 
Malmberget operation, the town of Malmberget had to be 
relocated to insure safety. The Malmberget Mine employs 
truck haulage rather than rail, and transports the ore in 
45-st trucks to the primary crusher underground. Trackless 
haulage was selected mainly because it offers more flexibil- 
ity than rail. 



The Kudremukh Iron Ore Company Limited, a 
Government-owned enterprise of India, has constructed the 
largest new iron ore project in the world at Kudremukh in 
southern India. The mine is scheduled to produce an 
average of 90,700 mt/d at full capacity. The mining methods 
to be employed are similar to those at large opencast mines 
elsewhere in the world. The mine will employ the largest 
mining equipment in India, utilizing 120- to 150-mt-ore 
haulage trucks. Haulage roads have been specially con- 
structed to provide protection against the ravages of the 
monsoon season. A unique aspect of this project is that 
manual labor had not yet been replaced by machines dur- 
ing its construction phase. At the project's peak about 
20,000 people were employed by the contractors. The opera- 
tion will employ about 3,100 people at full production 
capacity. The entire operation, including crushing, 
beneficiation, slurry transport of ore concentrate, filtration 
for production of concentrate cake, and port facilities, will 
be computerized. 

Common haulage methods used to transport ore to a 
beneficiation plant include rail, trucks, and conveyors. Rail 
and conveyors are most often the least expensive haulage 
method; however, the geometry of the ore body, depth of 
the pit, and other factors dictate the methods used at any 
particular site. Combination haulage methods, utilizing con- 
veyors, rail, and trucks, are common in many surface 
operations. 

Different systems of ore haulage, while not unique, are 
employed at various operations. The El Encino Mine in Mex- 
ico employs an aerial tramway to transport crushed ore 22 
km to the concentrator and pellet plant. The La Perla Mine 
and the Las Hercules Mine in Mexico are connected by a 
379-km slurry pipeline to carry ore to a new pellet plant 
at Monclova, Coahuila. The pipeline has a capacity of 4.5 
Mmt/yr. The Kudremukh Mine in India operates a slurry 
pipeline with a capacity of 7.5 Mmt/yr. Another system of 
ore transportation is employed at the Cerro Bolivar and 
Altamira Mines in Venezuela, which is similar to haulage 
at the Reserve Mining Co. deposit in Minnesota. At these 
mines trucks haul the ore where it is dumped directly into 
railroad cars. The unit trains then travel 145 km to Puerto 
Ordaz where they pass through a single rotary dumper to 
unload the ore. 



BENEFICIATION METHODS 

Iron ore is categorized as to its size and type of process- 
ing. It can be classified as crude ore, which is an unconcen- 
trated ore as it leaves the mine. If this ore can be used with 
minimal crushing and screening, it is considered direct- 
shipping ore. However, almost all iron ore mined is 
beneficiated in order to obtain uniformly sized products, im- 
prove the iron content, and eliminate impurities. The prod- 
ucts (either coarse or fine) of beneficiation plants are called 
concentrates. Agglomeration of fine concentrates and some 
natural ores is done to facilitate transportation and 
smelting. The agglomerates are called pellets, sinter, bri- 
quets, or nodules, depending upon the nature of the ag- 
glomeration process. 

Physical properties of iron ore are important in 
beneficiation and affect milling costs. Magnetism is impor- 
tant, for the concentration of both magnetite and hematite 
(hence the use of high-intensity magnetic separators). 
Specific gravity differences permit concentration of ores by 
washing, heavy-medium separation, and the use of Hum- 
phreys spirals, Reichert cones, cyclones, etc. Some ore can 



11 



be concentrated merely by screening. Physical-chemical dif- 
ferences permit concentration by flotation. Chemically com- 
bined water in hydrous minerals such as goethite (limonite) 
is hard to drive off; hence, such ore contains less iron and 
results in a lower price. 

Crude ore may be of direct shipping quality, which only 
requires a crushing and screening process followed by direct 
shipment to the blast furnace. The concentration methods 
that may be utilized include crushing, screening, heavy- 
media separation, jigging, and dewatering. Fines are 
further processed by sintering to produce an acceptable 
product. 

Primary crushing is carried out in jaw crushers, 
gyratory crushers, or rolls. Secondary crushing is normally 
accomplished in a cone crusher, by rolls, or in a hammer 
mill. Grinding is mainly carried out in ball mills or rod 
mills. 

Commonly used methods for iron ore concentration in- 
clude heavy-media separation, flotation, Humphreys spiral, 
and magnetic separation. The method used for iron ore con- 
centration depends on several factors: magnetic, mineral- 
ogical, and physical characteristics of ore and gangue as 
well as availability and cost of power, water, and reagents. 
The method or combination of methods eventually utilized 
will entail extensive research and pilot plant testing to 
develop the optimum cost-effective process. 

Dewatering, or solid-liquid separation, produces a 
relatively dry concentrate for shipment. Partial dewater- 
ing is also performed at various stages in the treatment, 
so as to prepare the feed for subsequent processes. The dry- 
ing of concentrates prior to shipping is the las t ope ration 
that may be performed in the mineral-processing plant for 
nonagglomerated products. It reduces the cost of transport 
and is usually aimed at reducing the moisture content to 
about 5 wt pet. 



AGGLOMERATION METHODS 



One of the most important physical characteristics of 
iron ore is the size of the particles. Iron ore feed that con- 
tains fine particles causes operational problems in the blast 
furnace. Hence, most iron ore, of less than 1/4-in-diam size, 
must be agglomerated before it can be used in the blast fur- 
nace. Agglomeration is a process in which small particles 
are combined to produce larger, permanent masses. The two 
principal methods of agglomeration used for iron ore are 
sintering and pelletizing. 

Sinter is made by igniting a mixture of fine ore (1/4 in 
to 100 mesh), lime or limestone, and coke on a moving 
horizontal grate. Sinter plants are almost all located adja- 
cent to steel mills because sinter is brittle and deteriorates 
easily when handled. Another benefit of locating sinter 
plants near steel mills is that it enables the recovery and 
the use of steel plant dust and coke breeze, both generated 
during steelmaking. 

Pellets, on the other hand, have excellent handling 
characteristics and are easily transported. Hence, most 
pellet plants are located near mines because the fines that 
comprise pellets are difficult to transport. Pellets are made 
by combining ore particles less than 100 mesh with a binder, 
usually bentonite, and then hardening them in furnaces. 
The pellets produced generally have a very high iron con- 
tent, rarely less than 60 pet and usually 65 pet or more. 
Pellets are made by rolling ore with controlled moisture con- 



tent around in a drum or on a rotating inclined disc. Some 
small pressure is necessary to consolidate the pellets as they 
form, but this comes mainly from their own weight applied 
to each small particle as it is picked up. They are hardened 
or "indurated" by firing at such a temperature that a good 
bond is produced either by recrystallization of the minerals 
present or by the formation of glasses. 

Initially, magnetite concentrates were pelletized 
because the heat of reaction constituted a large portion of 
the necessary process fuel. Now, however, hematite, mix- 
tures of hematite and magnetite, and mixtures of hematite 
and limonite can also be pelletized. The exothermic reac- 
tion from pelletizing magnetite ore reduces the amount of 
fuel required and can have a very favorable effect on the 
economics of an operation. Pellets made from hematite and 
hematite-limonite ores may require as much as 30 L fuel 
per long ton of ore, while fuel requirements for magnetite 
ores are considerably lower. Plants run by LKAB in Sweden 
use as little as 8 L/lt fuel. Fuels normally used to fire pellet 
plants are natural gas and/or No. 6 fuel oil. 

In recent years, pelletizing has been increasingly 
adopted by some developing countries. The reasons for this 
are (1) a desire for increased foreign exchange earnings, (2) 
a need to utilize a higher proportion of fines, and (3) the 
production of feed for growing domestic steel industries. 

Until the mid-1970's, pellets were a competitive 
substitute for sinter as a blast furnace feed, but in some 
cases rapidly rising oil prices caused pellet production costs 
to rise to levels that eroded any competitive advantage that 
pellets had over sinter. While overall pellet production has 
stagnated since 1974, capacity outside North America and 
the U.S.S.R. continued to increase from about 63 MMlt to 
over 115 MMlt. Much of this capacity was added in Latin 
America, particularly Brazil, in an attempt to utilize and 
add value to iron ore production. 

North American capacity utilization of pellet plants has 
fallen from the levels achieved early in the 1970's. However, 
owing to the lack of competitive substitutes for pellets in 
North America, the fall was not as pronounced as expected, 
at least through 1981. 

A main reason for the declining trend is related to fuel 
price. In 1976-81, OPEC oil prices increased approximately 
300 pet. In countries that produce some of their own oil, the 
fuel price increases were not as extreme; e.g., Canadian fuel 
price increases were around 200 pet. But in either case, 
plants were closed either because of high fuel costs or 
because prices that producers needed to receive for pellets 
became so high that there was no market for them. 
Hamersley Iron and Robe River (Australia), the Iron Ore 
Company of Canada (Spet-Iles, Canada), and LAMCO 
(Liberia) all closed their pelletizing plants owing to ex- 
cessive oil prices, for example. Hierro Peru (Peru) closed its 
oldest pelletizing circuit owing to high fuel costs and low 
pellet prices. In 1981, the two export-oriented pellet plants 
in the Goa region of India were closed owing to high fuel 
oil costs and the inability to pass those costs on to their 
Japanese customers. Both plants are likely to undergo major 
modifications to attempt to reduce operating costs. 

With respect to the world market, however, the reduc- 
tion in the production of pellets has not led to a correspond- 
ing fall in ore supplies, since the reduced volume of pellets 
has partly been compensated for by increased quantities of 
concentrate and fine ore. While some pellet projects have 
come on line, others have been tabled because of high fuel 
prices. It is not known at this time if and when their future 
development will be reconsidered even though fuel prices 
have fallen. 



12 



METHODOLOGY 



The Bureau of Mines is developing a continuously evolv- 
ing methodology for the analysis of long-run mineral 
resource availability. The flow of the Bureau's Minerals 
Availability program (MAP) evaluation process from deposit 
evaluation to analysis of availability information is illus- 
trated in figure 4. In order to determine potential avail- 
ability of iron ore, the Bureau selected 129 deposits located 
in 25 MEC's for evaluation, of which 43 are domestic mines 
or deposits. For each deposit, geologic, mining, and 
beneficiation data were collected. Data included resource 
estimates, actual and estimat- i mine and mill operating 
capacities, estimated life, and capital and operating costs. 

Costs used in this study were actual where available 
or were estimated by various costing techniques. In addi- 
tion, data were also collected from other sources such as 
professional journals, industry publications, and individual 
companies. Costs for U.S. deposits were developed by the 
Bureau's Field Operations Centers. The Bureau's cost 
estimating system (CES) (10) was utilized in generating 
costs for domestic properties. Data for properties in MEC's 
were collected or developed under contract. 

For each iron ore operation included in this study, 
capital expenditures were calculated for exploration, ac- 
quisition, and development; for mine and plant equipment; 
and for constructing and equipping the mill. The capital 
expenditures for the different mining and processing 
facilities include the costs of mobile and stationary equip- 
ment, construction, engineering, infrastructure, and work- 
ing capital. Infrastructure is a broad category that includes 
costs for access and haulage facilities, ports, water facilities, 
power supply, and personnel accommodations. Working 
capital is a revolving cash fund required for operating ex- 
penses such as labor, supplies, insurance, and taxes. 

The total operating cost of a mining project is a com- 
bination of direct and indirect costs. Direct operating costs 
include operating and maintenance labor and supplies, 



supervision, payroll overhead, insurance, local taxation, and 
utilities. The indirect operating costs include technical and 
clerical labor, administrative costs, maintenance of 
facilities, and research. 

All capital investments incurred prior to January 1969 
(15 yr or more prior to the data of the analysis) are treated 
as sunk costs and ignored. The undepreciated balances of 
investments incurred since January 1969 are carried for- 
ward and entered as an expenditure in January 1984, the 
first year of the evaluation. All subsequent investments, 
reinvestments, operating costs, and transportation costs are 
expressed in constant January 1984 U.S. dollars. 
Reinvestments will vary according to capacity, length of pro- 
duction life, and age of the facilities. 

After production parameters and costs for the develop- 
ment of the iron ore deposits were established, the Bureau's 
supply analysis model (SAM) (11) was used to perform 
various economic evaluations pertaining to the availability 
of iron ore. The SAM system is an economic evaluation 
simulator that is used to determine the constant-dollar long- 
run price at which the primary commodity must be sold to 
recover all costs of production, including a prespecified 
DCFROR on investment; in other words, the price deter- 
mined is the average long-run total cost of production for 
each operation over its entire producing life. The DCFROR 
is defined as the rate that makes the present value of all 
current and future revenues equal to the present value of 
all current and future costs of production. For this study 
a constant 15-pct DCFROR on investment was specified. 

The SAM system contains a separate tax records file 
for each State and foreign country that includes all the rele- 
vant tax parameters under which a mining firm would 
operate. These tax parameters are applied to each mineral 
deposit under evaluation with the implicit assumption that 
each deposit represents a separate corporate entity, with 
negative cash flows in the developmental stages carried for- 



Identlfi 

an 


cation 
d 














Mineral 

Industries 1 

Location 1 

System 1 

1 (MILS) | 

data j 

i 

MAP 

com pu ter 

data 

base 


selection 
of deposits 






















Tonnage 

and grade 

determination 








p 






















1 




Engineering 

and cost 

evaluation 






p 


w 










i 








t 1 




Deposit 

report 

preparation 




MAP 

permanent 

de posit 

files 




' 


1 


f 



























Ta xes, 

royalties, 

cost indices, 

prices, etc. . 



Data 

selection and 

validation 



War lable and 
parameter 
adjustments 



Economic 

analysis 



Data 



Availability 
curves 



Analytical 
reports 



Sensitivity 
analysis 



Data 



Availability 
curves 



Analytical 
reports 



Figure 4.— Minerals Availability program evaluation procedure. 



13 



ward over time as tax losses (where allowed) rather than 
being applied against other possible corporate revenues in 
the year they occur. Other costs in the analyses include stan- 
dard deductibles such as depreciation, depletion, deferred 
expenses, and investment tax credits. The SAM system also 
contains a separate file of economic indexes to allow for up- 
dating of all cost estimates for producing, developing, and 
nonproducing deposits. 

Detailed cash-flow analyses are generated with the SAM 
system for each preproduction and production year of a mine 
or deposit, beginning with the initial year of analysis (1984). 
Upon completion of the individual analyses for each deposit, 
all properties were simultaneously analyzed and aggregated 
into availability curves. 

The potential availability of the iron ore products 
recoverable from a deposit is presented graphically as a 
function of the total cost of production (defined as the 
constant-dollar long-run price necessary to recover all pro- 
duction costs and the specified rate of return) associated 
with that deposit. Availability curves are constructed as ag- 
gregations of the total amount of product potentially avail- 
able from each of the evaluated operations, arranged in 
order from the deposits having the lowest average total cost 
per unit of production to those having the highest. The 
potential available quantity of the iron ore product at a par- 
ticular market price can be seen by comparing that price 
with the derived average total cost values shown on the 
availability curves. The total recoverable tonnage poten- 
tially available at or below a particular market price can 
be read directly from the curve. 

For this study, all iron ore products were assigned to 
one of four general categories: lump ore, sinter fines, pellet 
feed, and pellets. Shown in table 6 are the products with 
sizes and commodity prices assumed for each. When there 
is more than one product available from each mine, the total 



Table 6.— Iron ore products, sizes, and commodity prices 



Product 



Size 



Lump ore Plus 1/4-in 

Sinter fines Minus 1/4-in plus 100 mesh 

Pellet feed Minus 100 mesh 

Pellets Minus 20 plus 10 mm 



Commodity price, 
$/Fe unit 

032 
.28 
.30 

.42 



cost reflects the required prices for each product. "Price pro- 
portioning" is utilized to allow for the total cost of produc- 
tion to be allocated among all products rather than one, 
especially in operations for which there is not a clearly 
defined primary product. Each product at each operation 
is assigned a commodity price, shown in table 6. The ratio 
of the price or the price proportion of one product to another, 
e.g., of lump ore to sinter fines, has been approximately the 
same over the last few years and was assumed to remain 
constant in the future. For example, prices for sinter fines 
have been approximately 88 pet of the price of lump ore and 
are assumed to remain at this level. 

The total necessary revenues for each property were 
determined, and then allocated to each product of that 
operation. For example, a property producing 5 Mmt/yr of 
lump ore grading 66 pet Fe and 3 Mmt/yr of sinter fines 
grading 64 pet Fe per year would receive 66 pet of its 
revenues from the lump ore and 34 pet from the sinter fines. 4 
Hence, the availability curves show the price required 
or total cost for each product from each mine, because many 
of the mines produce more than one product. 

Certain assumptions are inherent in the availability 
curves. First, all undeveloped deposits will produce at full 
design capacity throughout their proposed productive lives. 
Second, each operation will be able to sell all of its output 
at the determined total cost and obtain at least the minimim 
specified rate of return. Third, all preproduction develop- 
ment of all undeveloped deposits began in January 1984. 



EVALUATED IRON ORE RESOURCES 



According to Bureau statistics, world iron ore resources 
are estimated to exceed 800 billion It of crude ore and 
contain more than 260 billion st Fe (1). Evaluated in this 
study are demonstrated iron ore resources of 75.3 billion 
It containing 29.8 billion It recoverable Fe. Forty-three 
domestic deposits containing 9.5 billion It of iron ore and 
86 foreign deposits containing 20.3 billion It of iron ore were 
evaluated in this study. Table 7 shows the properties eval- 
uated in this study with resource and other pertinent 
deposit information. 

The selection criterion used for the domestic iron ore 
deposits for inclusion in this study was a minimum of 2 
MMlt of m situ contained iron. Because of the magnitude 
of the number of other known deposits in the MEC's no 
single criterion was used for deciding whether or not a par- 
ticular mine or deposit was to be included in this study. Con- 
sideration was given to large mines currently in produc- 
tion, particularly in the export market, deposits for which 
production plans have been announced, and deposits impor- 
tant to an individual country's economy, including those 
that have a chance of being developed in the foreseeable 
future. The selection criterion is admittedly subjective for 
the United States as well as for foreign properties. A strict 
adherence to selection criteria based on contained iron data 
would have omitted some of the mines presently important 



to the world market while including deposits that have no 
potential development based on political considerations and 
good business sense. 

The resource data for the deposits evaluated for this 
study have been collected from many sources, both pub- 
lished and unpublished. It is the intention of the Bureau 
to evaluate individual deposit resources at the demonstrated 
level according to the definition established by the Bureau 
of Mines and the U.S. Geological Survey, as shown in figure 
5. This corresponds roughly to the proven plus probable 
levels normally used by industry. Some sources, however, 
have used the term "reserves" in a general sense and have 
included either proven reserves only or have also included 
material in their reserve figures that is more accurately 
described as a part of potential ore. Some companies publish 
the same reserve figure continuously or for the entire com- 
pany holdings and not on an individual deposit basis. At- 
tempting to adjust these reserves for subsequent produc- 
tion introduces a degree of unce rtainty because many of the 

4 Lump ore: 5 Mint x 66 Fe units x $0.32/Fe unit = $105,600,000 

Sinter fines: 3 Mmt x 64 Fe units x $0.28/Fe unit = $ 53,760,000 

Total revenues $159,360,000 

Portion of revenues: 

Lump ore: $105,600,000/$159,360,000 = 66 pet 

Sinter fines: $53,760,000/$159,360,000 = 34 pet 



14 



Table 7. — MEC iron ore deposit information and demonstrated resources used for analysis 

Country, State, Status , Mining Milling ProductS 4 iron grade, tonnage. Cont ?i"* d Fe ' 

and property method 2 method 3 p^j MM j( MMIt 

Algeria: 

Gara Djebilet E S M S 51.8 969.4 502.1 

Ouenza P S S PF,S 53.0 40.3 21 .4 

Total or wtd av 5T9 1,009.7 523.5 

A I IStf*r3 1 13 ' 

Deepdale E S S S 57.2 984.2 563.0 

Giles Mountain E S S S 63.6 295.3 187.8 

Koodaideri E S S S 61 .7 71 1 .6 439.1 

Marandoo E S S L,S 62.1 339.2 210.6 

Marillana E S S S 59.7 738.1 440.6 

McCamey's Monster E S S S,L 62.4 246.4 153.8 

Middleback Range P S S L,P,S 63.7 75.5 48.1 

Mining Area C E S S S 62.2 440.0 273.7 

Mount Brockman E S S S 62.2 393.7 244.9 

Mount Tom Price P S M L,P,S 61.9 640.2 396.3 

Mount Whaleback P S S S,L 61.4 1,653.0 1,014.9 

Nammuldi E S S S 62.5 206.7 129.2 

Paraburdoo P S S S,L 63.4 444.3 281 .7 

Rhodes Ridge E S S S 61.8 984.2 608.2 

Robe River P S S P,S 57.0 138.4 78.9 

Savage River P S M P 35.0 85.6 30.0 

TR5585 E S S S 62.2 206.7 128.6 

West Angelas E S S S 62.2 314.2 195.4 

Wittenoom E S S S 54.9 984.2 540.3 

Yandicoogina E S S S 58.5 1,223.4 715.7 

Total or wtd av 601 11,104.9 6,680.8 

Brazil: 

Aguas Claras P S S PF,L,S 62.2 254.6 158.4 

Alegria P S S L,S 63.5 171.1 108.6 

Andrade P S S L,S 65.2 85.1 55.5 

Capanema P S S L,S,P 61.2 176.4 108.0 

Carajas E S S PF,L,S 66.1 1,319.8 872.4 

CasadePedra P S S L,S 63.7 237.9 151.5 

Caue P S M L,P,S 56.1 611.6 343.1 

Conceicao-Dos Corregos P S HMS S,P,L 66.6 1,033.5 688.3 

Corregos do Feijao P S S S,PF,L 64.7 102.5 66.3 

Fabrika-Joao Pereira P S M S,L,P 62.5 256.7 160.4 

Mutuca P S S S,L 63.7 59.0 37.6 

Periquito P S S L,S 66.6 151.1 100.6 

Samarco P S F PF,P 53.2 351.7 187.1 

Tamandua E S S PF,L,S 63.8 274.6 175.2 

Timbopeba P S S S,L 66.6 167.3 111.4 

Total or wtd av 6373 5,252.9 3,324.4 

Cameroon: Les Mamelles E S F P 30.1 196.8 59.2 

Canada: 

Carol Lake P S S S,P 37.6 1,733.3 651.7 

Fire Lake P S S P 38.0 352.3 133.9 

Mount Wright P S S S 31.4 2,471.6 776.1 

Wabush P S M P 36.0 1,691.9 609.1 

Total or wtd av 

Chile: 

El Algarrobo P S M S,L,P 

El Romeral P S M S,L 

Total or wtd av 

Gabon: Belinga E S S S 

Guinea: 

Mount Nimba E S S S 

Simandou E S S PF,L,S 

Total or wtd av 

India: 

Bailadila # 5 P S S S,L 64.4 206.2 137.8 

Bailadila #14 P S S S,L 66.9 76.3 51 .0 

Bolani P S S S,L 58.9 471.8 277.9 

Kudremukh P S F PF,P 38.1 636.6 242.5 

Zone D P S S S,L 60.8 199.7 121.4 

Total or wtd av 5T2 1 ,590.6 830.6 

Ivory Coast: Mount Klahoyo E S M P 35.7 659.4 235.4 

Liberia: 

Bea Mountain E SMS 41.8 120.9 50.5 

Bong P S M S,P 37.1 262.4 97.4 

Mano River PP S S S 51.5 79.6 41.0 

Nimba P S F PF,P,S 59.1 61 .1 36.1 

Western Area P S M S 52.2 405.0 21 1 .4 

Wologisi E SMS 32.7 812.0 265.5 

Total or wtd av 

Libya: Wadi Shatti E S S S 

Mauritania: 

F'Derik P S S S 

Guelbs E S M S,PF 

Total or wtd av 



Recoverable 

contained Fe, 

MMIt 



421.6 
15.8 



437.4 



550.9 
183.7 
429.8 
197.0 
431.2 
150.4 
47.0 
201.5 
235.7 
278.6 
960.8 
126.4 
275.4 
587.8 
78.9 
22.1 
125.8 
187.6 
529.0 
671.3 



6,270.9 



148.4 

103.8 

54.3 

105.7 

815.9 

92.1 

317.5 

637.9 

61.6 

94.7 

36.7 

98.5 

168.5 

164.5 

109.6 



3,009.7 
49.8 



275.0 
107.1 
645.3 
233.1 



34.7 


6,249.1 


2,170.8 


1,260.5 


54.0 
55.0 


63.0 
78.0 


34.0 
42.9 


27.8 
38.4 


54.5 
63.9 


141.0 
506.9 


76.9 
323.9 


66.2 
237./ 


66.7 
63.1 


344.5 
590.5 


229.8 
372.6 


206.8 
363.0 


64.4 


935.0 


602.4 


569.8 



112.5 

42.8 

66.0 

144.8 

111.4 



477.5 
208.7 



18.4 
84.9 
25.5 
21.8 
160.5 
199.7 



40.3 
51.4 


1,741.0 
782.4 


701.9 
402.2 


510.8 
393.5 


64.5 
36.8 


130.7 
380.0 


84.3 
139.8 


76.3 
104.3 


43.9 


510.7 


224.1 


180.6 



15 



Table 7. — MEC iron ore deposit information and demonstrated resources used for analysis — Continued 



Country, State, 
and property 



Status 1 



Mining 
method 2 



Milling 
method 3 



Products" 



In situ 

iron grade, 

pet 



In situ 

tonnage, 

MMIt 



Contained Fe, 
MMIt 



Recoverable 

contained Fe, 

MMIt 



Mexico: 

El Encino-Aquila P S M L,P 

La Perla P S M P,L 

Las Hercules P S F P 

Las Truchas-Ferrotepec P S M P 

Pena Colorado P S M P 

Total or wtd av 

New Zealand: Waipipi P D G S 

Norway: Sydvaranger P S P P 

Peru: Marcona P S M PF,P,S 

Portugal: Moncorvo E S M P 

Senegal: Faleme Area E S S S,L 

Sierra Leone: Marampa P S G S 

Sourth Africa, Republic of: 

Sishen P S HMS S,L 

Spain: Marquesado P S S S,L 

Sweden: 

Kiruna P U M P,S,L 

Malmberget P U M P,S 

Svappavaara P S S P,L 

Total or wtd av 

United States: 
Alabama: 

Big Sandy Area PC U H P 

Birmingham District PC 1971 U H P 

Southeast Alabama District PC S H P 

Total or wtd av 

Alaska: 

Klukwan E S M P 

Port Snettisham E S M S 

Total or wtd av 

California: Eagle Mountain PC 1982 S H P 

Michigan: 

Cascade Reserves PC S H P 

Empire Mine PT S M P 

Groveland Mine PC 1982 S M P 

Republic Mines TC 1981 S F P 

Tilden Mine PT S F P 

Total or wtd av 

Minnesota: 

Butler Taconite PC 1985 S M P 

Erie Mine PT S M P 

Hibbing Taconite PT S M P 

Magnetic Taconites 5 E S M P 

Minntac Mine PT S H P 

Minorca Mine PT S M P 

National Steel PT S M P 

Peter Mitchell PT S M P 

Thunderbird north and South PT S MP P 

Total or wtd av 

Missouri: 

Bourbon Deposit PP U M P 

Camels Hump PP U M P 

Pea Ridge PT U M PF 

Total or wtd av 

Montana: 

Black Butte E S M P 

Carter Creek Iron E S M P 

Copper Mountain E S M P 

Total or wtd av 

Nevada: 

Buena Vista E S M P 

Dayton Iron Deposit E S P P 

Modarelli Mine E S H P 

Pumpkin Hollow E S M P 

Total or wtd av 

New Jersey: Mount Hope Iron Mine ... PC U M S 

New York: 

Benson Mines PC 1978 S M P 

Mineville Mines PC 1971 U M P 

Total or wtd av 

Texas: Lone Star Deposits PC 1984 S H S 

Utah: 

McCahill Orebody PC S M P 

Rex Orebody E S M P 

Total or wtd av 

See footnotes at end of table. 



36.4 


88.1 


32.1 


24.0 


50.7 


41.0 


20.8 


13.2 


58.3 


98.0 


57.1 


28.4 


48.8 


106.3 


51.9 


37.7 


37.7 


130.7 


49.3 


43.8 


45.5 


464.1 


211.2 


147.1 


15.5 


271.2 


42.0 


33.9 


32.6 


187.3 


61.1 


51.8 


53.5 


1,433.3 


766.8 


644.7 


37.0 


243.7 


90.2 


52.2 


63.6 


334.6 


212.8 


170.8 


32.3 


57.1 


18.4 


15.0 



64.0 
53.7 


1,293.8 
33.9 


828.0 
18.2 


656.5 
16.7 


49.2 
40.4 
45.0 


1,584.3 
211.6 
233.2 


779.5 

85.5 

104.9 


746.7 
80.2 
84.5 


47.8 


2,029.1 


969.9 


911.4 



35.2 


24.4 


8.6 


6.7 


34.9 


1,061.0 


370.3 


58.2 


26.4 


258.9 


68.3 


7.3 



33.3 


1,344.3 


447.2 


72.2 


10.8 
18.9 


883.5 
530.0 


95.4 
100.2 


72.3 

65.1 


13.8 
33.4 


1,413.5 
339.5 


195.6 
113.4 


137.4 
83.1 



34.2 


1,377.9 


471.2 


107.4 


31.5 


1,233.1 


388.4 


231.1 


35.1 


101.8 


35.7 


26.2 


34.2 


39.8 


13.6 


13.6 


33.3 


854.1 


284.4 


190.6 



33.1 



3,606.7 



1,193.3 



568.9 



32.0 


99.5 


31.8 


17.7 


31.7 


1,464.1 


464.1 


345.4 


30.7 


1,038.1 


318.7 


197.2 


621.6 


17,319.5 


3,741.0 


3,366.9 


622.0 


1,700.7 


389.6 


331.6 


621.0 


264.0 


55.4 


52.6 


31.0 


965.9 


299.4 


172.0 


6 23.5 


1,109.4 


260.7 


233.6 


32.3 


1,205.0 


389.2 


261.4 



6 23.6 


25,166.2 


5,949.9 


4,978.4 


30.4 
36.6 
57.0 


178.6 

22.3 

129.3 


54.3 
8.2 

73.7 


35.0 

5.8 

66.5 


41.3 


330.2 


136.2 


107.3 


22.2 
30.0 
27.8 


137.9 
74.6 
27.3 


30.6 

22.4 

7.6 


25.4 

17.9 

6.1 


25.3 


239.8 


60.6 


49.4 



19.0 


140.7 


26.7 


23.4 


42.0 


40.4 


17.0 


14.6 


51.8 


26.1 


13.5 


12.4 


26.7 


178.1 


47.6 


42.3 



27.2 
38.4 


385.3 
4.5 


104.8 
1.7 


92.7 
3.0 


23.5 
42.0 


181.0 
90.0 


42.5 
37.8 


29.8 
25.5 


29.6 
27.0 


271.0 
76.9 


80.3 
20.8 


55.3 
12.4 


52.5 
52.5 


49.2 
150.0 


25.8 
78.8 


23.3 
70.9 


52.5 


199.2 


104.6 


94.2 



16 



Table 7.— MEC iron ore deposit information and demonstrated resources used for analysis— Continued 

^ ~, i ..- ..-„. In situ In situ „ , . ,- Recoverable 

Country, State, Ste , , Mining M hng ProductS 4 iron grade, tonnage, Con, fJ n ^ d Fe ' contained Fe, 

and property method 2 method 3 p u ct MM j^ MMIt MM| , 

United States — Con. 

Wisconsin: 

Agenda Deposit E S M P 625.5 157.5 40.2 29.2 

Black River Falls PC 1983 S M P 30.0 14.5 4.4 3.2 

Gogebic Deposit E S M P 31.0 778.5 233.6 149.1 

Penokee Deposits* 1 and #2 E S M P 33.4 2,257.7 754.1 476.8 

Pine Lake Taconite E S M P 623.0 202.7 46.6 36.4 

South Butternut E S M P «25.9 52.2 13.5 9.8 

Total or wtd av 3T5 3,463.1 1,092.4 704.5 

Wyoming: Atlantic City PC 1984 S M P 26.1 69.6 18.2 16.0 

Total or wtd av, 

United States 25.6 36,909.8 9,519.0 6,974.8 

Venezuela: 

Altamira P S S P,L,S 63.1 128.6 81.1 68.7 

Cerro Arimagua E S S PF,L,S 62.2 133.9 83.3 82.4 

Cerro Bolivar P S S PF,L,S 63.1 184.7 116.5 112.8 

Cerro Redondo E S S P,L,S 61.1 162.4 99.2 96.2 

El Pao P S W S,L 63.1 34.3 21.6 20.6 

El Trueno E S S PF,L,S 61.1 108.3 66.2 64.1 

Los Barrancos E S S PF,L,S 63.1 228.3 144.1 139.6 

San Isidro P S S S,PF,L 64.1 385.8 247.3 217.1 

Total or wtd av 6279 1,366.3 859.3 801.5 

Grand total NAp 75,304.6 29,753.0 24,149.5 

'Status is as of January 1986 unless otherwise indicated. E, explored deposit; P, producer; PC, permanently closed; PP, past producer; PT, producing but 
with temporary closures; TC, temporarily closed. 
2 D, dredge; S, surface; U, underground. 

3 G, gravity separation; HMS, heavy medium separation; M, magnetic separation; P, pyrometallurgical processing; S, sizing; W, washing. 
4 L, lump ore; P, pellets; PF, pellet feed; S, sinter fines. 
5 Magnetic taconites in Minnesota contain subeconomic resources. 

6 These deposits are magnetic iron and not total iron, in which the iron content of the silicates and carbonates are not recovered. 



Cumulative 
production 



IDENTIFIED RESOURCES 



Demonstrated 



Measured Indicated 



Inferred 



UNDISCOVERED RESOURCES 



Hypothetical 



Probability range 
(or) 



Speculative 



ECONOMIC 



MARGINALLY 
ECONOMIC 



SUB- 
ECONOMIC 



Reserve 



base 



Inferred 



reserve 



base 



+ 



+ 



Other 
occurrences 



Includes nonconventional and low-grade materials 



Figure 5.— Mineral resource classification categories. 



17 



published production data are in terms of finished product 
and not in terms of crude ore mined. The possibility also 
exists that additional reserves or resouces have been proven 
at these properties. 

Resource numbers for Minnesota's Mesabi range are 
based on estimates made by Marsden (12). In table 7 the 
evaluated resources for Minnesota show a total of around 
25 billion It of in situ tonnage. Of this total around 8 billion 
It are actual demonstrated resources, while the remaining 
17 billion It are magnetic taconites composed of several 
deposits in the Mesabi range. These deposits were evaluated 
on a range by range basis in the Marsden study, which in- 
cludes subeconomic material. 



8 are capital cost estimates for mines in Australia and 
Brazil. While these mines have capacities greater than 35 
Mmt/yr, smaller mines also require high expenditures. For 
example, a typical 3-Mmt/yr-capacity mine will require an 
estimated $175 million for initial investments. As il- 
lustrated in the table, the costs for plant and equipment 
are small in comparison to the costs of the infrastructure. 
The infrastructure costs range from 60 to 70 pet of total 
capital investments for these two large mines, with the 
railroad and rolling stock being a major component. A 
capital cost for a pelletizing plant is not included in this 
table, but an estimated cost for a 10-Mmt/yr plant is ap- 
proximately $270 million. 



COSTS 



CAPITAL COSTS 

Mining traditionally has been a capital-intensive in- 
dustry with large investments required for planning and 
development. This is especially true for the iron ore in- 
dustry. Iron ore is a bulk commodity of a low unit value 
that must be mined in large volumes. Factors affecting 
capital investments for iron ore include the size of the opera- 
tion, the proposed locality, the necessary beneficiation 
facilities, and the infrastructure required to support the 
operation. Infrastructure includes rail lines, rolling stock, 
port facilities, and townsites. Infrastructure can account for 
20 to 70 pet of the total capital investment required in a 
typical iron ore operation. 

Two large mines are used as examples to illustrate the 
capital-intensive nature of iron ore mining. Shown in table 



Table 8. — Capital cost estimates for a large Australian and 
a large Brazilian iron ore mine 

(Million 1984 dollars per metric ton) 

Type of 

investment Australia Brazil 

Capacity mt/yr . . . 46,000,000 35,000,000 

Mine plant and equipment 344 208 

Mill plant and equipment 36 146 

Railroad 819 753 

Rolling stock 205 21 1 

Port 732 130 

Townsite 504 1 02 

Miscellaneous 1 766 439 

Total 3,406 1 ,989 

Miscellaneous costs include engineering, management fees, and 
administration. 



OPERATING COSTS 

The operating costs for the production of iron ore are 
discussed in this section. Table 9 shows operating cost 



Table 9. — Operating cost ranges for selected MEC iron ore mines and deposits 1 

Number Annual Ore Operating costs, 

Country of capacity, grade, 1984 $/lt ore 

Properties ^ P^ Mine Beneficiation 

Africa: 

Producers 2 7 2.2-24,6 63-65 1.10-3.40 0.60-2.30 

Nonproducers 3 12 4.5-25.2 56-67 1 .80- 3.20 .90-3.80 

A iictrgl jo" 

Producers 5 2.7-45.0 57-65 1 .60- 2.60 .30-1 .60 

Nonproducers 14 9.8-28.0 62-64 1.70-3.60 .30- .50 

Brazil: Producers 13 1.5-27.0 65-67 .70-2.00 .50-1.70 

Canada: Producers 3 17.4-43.8 66 2.00-2.50 3.00-3.50 

Europe: Producers 4 5 1.3-17.7 50-70 2.60- 7.20 1 .50-4.50 

India: Producers 5 1 .2-20.3 59-67 1 .00- 5.00 .50-1 .50 

Mexico: Producers 5 2.0- 5.0 60-69 3.70- 6.50 1.90-3.00 

Other South America: 

Producers 5 7 3.8-14.8 61-67 1.90-2.40 .90-2.70 

Nonproducers 6 4 4.5-9.5 62-64 1.90-2.10 W 

United States: 

Lake Superior producers 7 9 8.2-61 .7 63-66 2.00- 4.50 3.25-5.00 

Lake Superior nonproducers 8 12 2.2-28.7 62-65 2.50-4.50 3.50-9.00 

Other nonproducers 9 20 .7-8.9 42-69 3.50-15.50 2.00-6.75 

NAp Not applicable. W Withheld. 

Producers include presently producing mines; nonproducers include past producers, explored or developing deposits. 

2 African producers include Algeria, Liberia, Mauritania, Republic of South Africa, and Sierra Leone. 

3 African nonproducers include Algeria, Cameroon, Gabon, Libya, Ivory Coast, Liberia, Guinea, and Mauritania. 

••European producers include Norway, Spain, and Sweden. 

5 Other South American producers include Chile, Peru, and Venezuela. 

6 Other South American nonproducers include Venezuela. 

7 Lake Superior producers include mines in the Mesabi and Marquette ranges. 

8 Lake Superior nonproducers include mines and deposits in the Mesabi, Marquette, and Gogebic ranges. 

9 Other nonproducers include California, Missouri, Montana, Nevada, New Jersey, New York, Texas, Utah, and Wyoming. 



18 



ranges for selected MEC iron ore mines and deposits. Costs 
are presented by country and by production status on a 
dollars per long ton of ore basis for mining and milling. In 
this evaluation, a producer is defined as any mine presently 
producing, while a nonproducer is defined as any past pro- 
ducer, explored deposit, or developing deposit. 

Except in Sweden, iron ore mining is typically done by 
open pit methods. Mine operating costs per long ton typi- 
cally range from $1.00 to $5.00 in all countries except in 
Europe, Mexico, and the domestic nonproducers. The min- 
ing costs in Europe are higher, because of high labor costs 
and the fact that Swedish mines are underground opera- 
tions; high domestic mining costs may be attributed to 
energy and labor costs. The South American properties, in- 
cluding Brazil, have the lowest costs, $0.70/lt to $2.50/lt. 
The mining cost range for India is low, owing to the large 
Kudremukh project, another example of low labor costs. 

Specific processing is required for different types of ore, 
and this impacts beneficiation costs. Some ores, specifically 
the taconites produced in the Lake Superior region and the 
hematites in Canada, require intense grinding, which 
results in higher energy expenses. As seen in table 9, these 
costs are higher and range between $3.25/lt and $5.00/lt. 
Beneficiation averages in other regions range from $0.30/lt 
to $4.50/lt. The ranges and averages for the Brazilian pro- 
ducer region tend to be low relative to the other regions in 
both the mining and beneficiation categories. This can be 
attributed not only to inexpensive labor costs but to the 
Carajas project, which has vast resources of ore that re- 
quires minimum beneficiation. 

Pelletizing operating cost ranges are shown in table 10 
for only those countries that have pellet production. Pelletiz- 
ing is an energy-intensive operation directly related to the 
type of ore being processed. Magnetite ores are the least 
expensive to pelletize because an exothermic reaction 
created during the process minimizes the amount of fuel 
required. Hematite ores are more expensive, consuming ap- 
proximately 85 pet more fuel on a per-ton basis than 
magnetite ores. The pelletizing costs for Canada are about 
twice those of the other regions because the ores mined are 
hematite, which results in higher fuel costs. 

Table 10.— Pelletizing operating costs for selected MEC 
iron ore mines and deposits 

Operating costs, 
Region or country 1984 $/lt product 

Brazil: Producers 12.30-13.00 

Canada: Producers 1 15.00-22.70 

Europe: Producers 5.70- 8.90 

Mexico: Producers 7.50-10.40 

United States: 

Lake Superior producers 6.00-10.60 

Lake Superior nonproducers 7.30-12.90 

Other nonproducers 6.50-14.00 

■•Canadian producers include mines processing only hematite ores. 



SHIPPING COSTS AND RATES 

Internal iron ore transportation consists of the move- 
ment of iron ore or iron ore products to a steel plant. 
Sometimes the iron ore product is transported by truck to 
a nearby rail spur for shipment to a steel mill. Often the 
iron ore is transported directly by rail or barge to the steel 
mill or to a port for exportation. Some estimates of iron ore 
transportation rates are shown in table 11. Estimates 
similar to these were used in the study for various routes 
from the mine to final destination. The table illustrates that 



Table 1 1 .—Estimates of rail transportation costs 

Country < -' ost ran 9 e ' Distance 

y 1984 range, 

$/mt • km km 

Australia 0.003-0.004 50-430 

Brazil 005- .007 640-730 

Canada .008- .009 410-450 

India .020 (av) 60-470 

Sweden .038- .042 180-220 

South Africa, Republic of .005- .016 50-860 

United States' .005- .012 50-400 

1 Cost range for the United States is in dollars per metric ton-mile and distance 
is in miles. 



there is a correlation between length of haul and cost. The 
greater distance that ore is transported, the lower the cost 
is per metric ton-kilometer. 

The availability curves in this report are constructed 
on an f.o.b. port basis, because once the iron ore product 
reaches the port it is sold in several markets. Because many 
prices include the costs of shipping and handling, it is dif- 
ficult to assess at the port how much of a product will be 
sold according to any specific price structure. Therefore, all 
products were taken to the port as a common reference point 
for the purpose of discussing availability. 

During the past few years a variety of fluctuations in 
the shipping industry have caused freight rates to change 
accordingly. The freight rates do not reflect the actual costs 
required to operate the ship and recover capital in- 
vestments. The shippers have had to remain competitive 
with each other and at times will contract rates that will 
not necessarily make a profit but will ensure some type of 
work. Therefore, combining an unstable industry with a 



1 1 r 

A 

x Ax 

■ .\_ 

i i i 


:^ 


i 




i 


1 1 T 1 

KEY 


100,000 OWT 

150,000 OWT 

200,000 OWT 


i 




i . 


i i i i 




10000 15,000 

SHIPPING DISTANCE, km 



Figure 6.— Freight operating cost curves. 



19 



complex pricing system, it is difficult to assess the actual 
operating costs associated with the shipping of iron ore prod- 
ucts on the international level. 

As discussed in the International Transportation sec- 
tion of this report, several factors influence the actual 
operating costs of shipping. Several correlations with ship- 
ping costs exist, which involve the variables of distance, ship 
size, and ore grade. This is shown in figure 6, which il- 
lustrates freight operating costs at varying distances, 
deadweight tonnage, and iron content. These curves were 
developed by a linear regression of data provided under con- 
tract to the Bureau of Mines. This data set utilized 1981 
costs, and because of the decline in the freight industry it 
does not correlate to present-day shipping operating costs 
and, therefore, freight rates. However, despite the actual 
costs, it illustrates that the greater the haulage distance 
and the larger the vessel, the lower the cost per iron unit. 

For the availability analysis in this study, ocean freight 
costs were not used as analysis was made f.o.b. port. Table 
12 shows 1984 ocean freight rates for spot charterings. From 
these rates it can be seen that ocean shipping accounts for 



a large portion of the final cost of iron. For example, in 1984 
Australian producers had operating costs per long ton of 
ore ranging from $1.90 to $4.20 (table 12), and shipping a 
long ton of ore to the Republic of Korea would cost $5.00 
to $6.00; thus, the shipping rates account for approximately 
60 to 70 pet of the total cost. 



Table 12.— Ranges of spot iron ore ocean freight rates, 1984 



Origin 



Destination 



Ship size, Rates, 
10 3 DWT $/lt 



Australia Republic of Korea . 

Western Europe . 



Brazil 



Japan 

Western Europe 



100-150 $5.00-$6.00 

100-150 6.50- 8.75 

130-150 7.00- 9.00 

220 5.25- 6.00 

50- 65 5.75- 6.50 

80-155 4.50- 6.00 



Eastern Canada 


Japan 

Western Europe 


130-150 
100-160 


7.00- 9.00 
3.00- 4.25 


Norway 


Western Europe . . . 


90-100 


1.75- 2.30 



Source: Industrial Minerals. 



AVAILABILITY OF IRON ORE PRODUCTS IN MARKET 
ECONOMY COUNTRIES 



The economic viability of any given deposit is deter- 
mined by the interrelationship of numerous factors. These 
factors consist of the inherent physical and chemical 
characteristics of the deposit such as the grade of ore, total 
resource, stripping ratio, type of ore, mining method, dilu- 
tion, geology, and location. The financial aspects related to 
the operating and capital costs, annual capacity, transpor- 
tation, tax structure, and numerous other considerations 
make up the total economic picture. The potential availa- 
bility of MEC demonstrated resources of iron has been 
analyzed, considering the above factors, for each of the 
mines and deposits evaluated in this study. In this study 
a producer is defined as any mine presently producing, and 
a nonproducer is any past producing, explored, or develop- 
ing deposit. The iron ore products evaluated are sinter fines, 
lump ore, pellets, and pellet feed. 



ANNUAL AVAILABILITY 

An annual curve shows the potential availability of total 
demonstrated resources at various total cost levels on an 
annual basis. The vertical axis represents total potential 
tonnage available; on the horizontal axis, time is 
represented in years for producers, and in the number of 
years following commencement of production for the 
nonproducers. 

For a commodity such as iron ore, annual curves only 
emphasize the size of the resource. Therefore, they do not 
illustrate possible depleting resources that could be a detri- 
ment to a country that relies heavily upon the commodity. 
Also, annual curves represent potential annual production 
at full-capacity levels. Only annual curves for sinter fines 
are shown for illustration purposes. Producer and non- 
producer annual availability curves for the other products 
are not shown as they tend to exhibit similar situations, 
thus illustrating the vast resources of tonnage available for 
each product. A summary of the potential annual avail- 
ability of iron ore products analyzed in this study is shown 
in table 13. 



Table 13.— Summary of annual availability of iron ore products 

Tonnage available at total 

cost less than or equal 

to reference price, 3 

Product Reference price, 2 MMIt 

and status 1 1984 $/ltu 1988 1992 1996 2000 

(N + 4) (N + 8) (N + 12) (N + 16) 

Total sinter fines: 

Producers 0.25 165 142 120 85 

Nonproducers ... .25 26 38 52 63 

Total lump ore: 

Producers .25 60 60 56 56 

Nonproducers ... .25 NAp 5 12 15 

Foreign pellets: 

Producers .40 20 20 20 20 

Nonproducers ... .80 NAp 45 45 40 

Domestic pellets: 

Producers .80 44 44 44 44 

Nonproducers ... .80 99 9 9 

Total pellet feed: 

Producers .25 4 4 2 1 .8 

Nonproducers . . . .25 NAp .7 2.0 2.6 

NAp Not applicable. 

'Annual availability for nonproducers is given assuming preproduction begins 
in 1984, or in year N, as illustrated for total sinter fines in figure 7. If preproduc- 
tion began in a year other than 1984, the year of the annual tonnage would 
be adjusted accordingly by N+4, N + 8, etc. 

2 Reference price is equivalent to various 1 984 market prices in the interna- 
tional market. 

3 Total cost is in 1984 dollars determined at a 15-pct DCFROR. 

The potential availability of sinter fines on an annual 
basis is shown in figure 7. This figure illustrates the total 
tonnage of sinter fines available annually at various cost 
levels. These curves represent producing and nonproduc- 
ing mines at 100 pet capacity. The downward trend of the 
producer curves, beginning in 1990, shows a minor amount 
of depletion of resource due to annual production. Similarly, 
annual curves for the nonproducers show an increase in pro- 
duction for period of several "preproduction" years, attain- 
ing a level of full production and remaining constant until 
production begins to deplete the available resources. 
Preproduction is assumed to begin in year N for the non- 
producer curves. 



20 



__AJ 


1 


1 1 1 1 I 1 


1 1 1 1 1 1 1 1 

Producers 


- 


175 








150 




125 

100 


"^^^ ^^$0.35 
^■\^__$0_25 

$0.20 

> i i i i i i i 


75 


1 1 1 1 1 1 



1984 



N+4 



86 



88 



90 



92 



94 



96 



98 



2000 



_ou 

■*- 

-> 
_> 


1 1 1 1 1 1 1 1 1 1 1 

Nonproducers 








of 300 

Z 
Ll. 


$0.35 


- 






|_J 250 

z 

CO 


- ^^ 


- 


200 




- 


150 


/ $0.30 


- 


100 


^^ $0.25 


- 


50 


_ ^ -— ^ 


— 


O 


1_ _ 1 1 1 1 1 i 1 1 l 1 


, 



N + 6 



N+8 



N+IO 
YEAR 



N + 12 



N + 14 



N + 16 



Figure 7. — Annual sinter fines availability for producers and nonproducers at various total costs, dollars per iron unit. 



21 



Table 13 shows similar trends over time for the other 
products. This table shows the availability of the various 
products on an annual basis at total costs that are less than 
or equal to a reference price, or market price. In the table, 
foreign and domestic pellets are shown separately because 
of differences in market pricing. The potential annual 
availability for the nonproducers is given assuming that 
preproduction begins in 1984. Preproduction may be as- 
sumed to begin in any other year designated as N, and the 
years that the annual tonnage is available should be ad- 
justed accordingly. 



TOTAL AVAILABILITY 

Total availability curves are the representation of poten- 
tially recoverable tonnage of a resource that is represented 
graphically as a function of total cost of production over the 
life of the operation at a prespecified DCFROR. The curves 
represent the aggregation of the product that is potentially 
available from each evaluated deposit in order from the 
lowest total cost per unit of production to the highest. For 
this type of curve the tonnage is represented on the horizon- 
tal axis with the total cost on the vertical axis. From this, 
the total potential available tonnage of that product at a 
given market price can be derived by comparing that price 
with the total cost shown on the availability curves. 

The iron ore products of sinter fines, lump ore, pellet 
feed, and pellets are sold on different price bases that vary 



by country, company, and contract. The availability curves 
in this study are presented on an f.o.b. basis, in which the 
total cost includes all costs required to take the iron ore 
product to the port. When market price is used to determine 
the potential total availability of an iron ore product, the 
reader must note that the curves in the study are f.o.b. port 
while the prices may be f.o.b. port, c.i.f., or c&f. (See Price 
Structure section of this report.) Therefore, ocean freight 
rates must be considered when c.i.f. or c&f prices are used. 
The availability analysis determined that 18.6 billion 
It of sinter fines, 4.9 billion It of lump ore, 14.7 billion It 
of pellets, and 820 MMlt of pellet feed are potentially avail- 
able in MEC's. 

Sinter Fines 

There are approximately 18.6 billion It of sinter fines 
potentially available from 73 of the 129 mines and deposits 
evaluated in this study. Of this total, approximately 61 pet 
is found in two countries— Australia and Brazil. Australia 
has 8.5 billion It (46 pet), and Brazil has 2.7 billion It (15 
pet). Seventeen other countries have potentially available 
resources ranging from 4.5 MMlt in the United States to 
970 MMlt in Canada. 

Total availability of sinter fines from 73 properties at 
a 15-pct DCFROR, f.o.b. port, is shown in figure 8. In- 
dividual curves for 40 producers and 33 nonproducers are 
also shown in this figure. Of the 18.6 billion It potentially 
available, 6.6 billion It (35 pet) are from producers while 



0.90 



.80 

.t 

c 

C 

o 

-!= .70 

i_ 

IV 
Q. 

« 

o 

00 

* .50 



o 

C 
O 



O 
O 

_J 
< 



.30- 



.20 



.10 



1 1 1 1 1 

KEY 


— 1 

r 
i 


1 1 1 




.. To+nl 


jeers 






— 


IOTQI 






rTOai 


Nonproducers 








- 


r-- J 

1 

1 










- 




i 




r^ 






_ ..--f 






1 r -rJ-- 


_ r ^_ r _ 1 r^ 




- 


rJ ~ J ~ "" _f 
1 " .—J- 




1 ,:j 

* _i ** 

I l l i I 


I 


I i i 



14 



16 



18 



2 4 6 8 10 12 

SINTER FINES, billion It 

Figure 8.— Total potential sinter fines availability for producers and nonproducers in market economy countries at a 1 5-pct DCFROR 



20 



22 



12.0 billion It (65 pet) are from nonproducers. The curves 
also show that up to 3.6 billion It are available from pro- 
ducers for less than a total cost of $0.28 per iron unit. 

The 1984 price for sinter fines on world markets ranged 
from $0.22 to $0.33 per iron unit. Therefore, at a total cost 
range of $0.22 to $0.33 there are approximately 2.9 to 10.4 
billion It of sinter fines potentially available at a 15-pct 
DCFROR, f.o.b. port. Availability of sinter fines for in- 
dividual countries and regions at specific market prices is 
discussed in the Regional Availability of Iron Ore Products 
section of this report. 

Lump Ore 

There are approximately 4.9 billion It of lump ore poten- 
tially available from 41 of the 129 mines and deposits 
evaluated in this study. Approximately 1.4 billion It (29 pet) 
are available from Australia and 1.2 billion It (25 pet) from 
Brazil. The remaining resources are from properties in eight 
countries with resources ranging from 10 to 500 MMlt. 

Figure 9 shows the total potential availability of lump 
ore for 41 properties at a 15-pct DCFROR, f.o.b. port. Also 
illustrated are the individual curves for 30 producers and 
11 nonproducers of lump ore. From the producers, a total 
of 3.7 billion It (76 pet) are potentially available, and 1.2 
billion It (24 pet) are potentially available from the non- 
producers. There are nearly 2.0 billion It of lump ore poten- 



tially available from the producers at less than a total cost 
of $0.24 per iron unit, while at the same total cost there 
is 11 pet, or nearly 230 MMlt, potentially available from 
the nonproducers. 

The market price for lump ore ranged from $0.26 to 
$0.32 per iron unit in 1984. At a 15-pct DCFROR there are 
approximately 2.2 billion to 3.0 billion It of lump ore poten- 
tially available within a total cost range of $0.26 to $0.32 
per iron unit, f.o.b. port. Lump ore availability for individual 
countries at specific market prices is discussed under 
Regional Availability of Iron Ore Products. 

Pellets 

Approximately 14.7 billion It of pellets are potentially 
available from 71 of the 129 evaluated deposits. There are 
approximately 5.9 billion It of pellets potentially available 
from 35 producers and 8.8 billion It from 36 nonproducers. 

Availability curves for the producers and nonproducers 
as a total are not shown because the foreign and domestic 
markets differ in pricing and the availability must be 
analyzed separately for each. Therefore, total curves with 
producer and nonproducer curves are shown for both 
domestic deposits and foreign deposits. 

Figure 10A shows the total potential availability of 
pellets from foreign deposits only at a 15-pct DCFROR, f.o.b. 
port. The figure also shows the individual availability 



0.6O 




1,000 



2,000 3,000 

LUMP ORE, MMlt 



4,000 



5,000 



Figure 9.— Total potential lump ore availability for producers and nonproducers in market economy countries at a 15-pct DCFROR. 



23 



1.40 



_ A, Foreign 



.20 



1.00 



.80 -f 



± .60H 

c 

c 
o 



Q. 
V> 



1 

.40 -j 



1 -20H 

00 



T 



^J 



/ 




J*' 




i * 



KEY 

Total 

Producers 

Nonproducers 



0.5 



1.5 



2.0 



2.5 



3.0 



D 

■3 
C 
O 

~3 



00 

o 
o 



_l 1.30- 



< 

I- 

o 



PELLETS, billion It 



3.5 




Figure 10.— Total potential pellet availability for producers and nonproducers in market economy countries at a 15-pct DCFROR. 



24 



curves for producers and nonproducers. From 25 producers 
there are 2.7 billion It of pellets available, and from 6 non- 
producers there are 588 MMlt available at a 15-pct 
DCFROR, f.o.b. port. 

Market prices for pellets on the foreign market in 1984 
ranged from $0.34 to $0.38 per iron unit, f.o.b. port. At these 
prices, approximately 350 to 440 MMlt of pellets are poten- 
tially available. The availability of pellets for individual 
foreign countries is discussed further under Regional 
Availability of Iron Ore Products. 

The total potential availability of pellets from domestic 
deposits at a 15-pct DCFROR, f.o.b. port, is shown in figure 
lOfi. Individual availability curves for producers and non- 
producers are also shown. There are potentially 11.4 billion 
It of pellets available, with 11 producers accounting for 3.2 
billion It (28 pet) and 30 nonproducers accounting for 8.2 
billion It (72 pet). 

The 1984 domestic market price ranged from $0.80 to 
$0.86 per iron unit, f.o.b. port. At these prices, there are 
approximately 2.1 to 2.2 billion It of pellets potentially 
available. The availability of domestic pellets is discussed 
further in Regional Availability of Iron Ore Products. 

Pellet Feed 

There are approximately 820 MMlt of pellet feed 
available from 17 evaluated mines and deposits. Of this 



total, approximately 312 MMlt (38 pet) are in Brazil and 
Venezuela, with another 168 MMlt (21 pet) in Peru and 133 
MMlt (16 pet) in India. 

Figure 11 illustrates the total potential availability of 
pellet feed along with individual availability of the pro- 
ducers and non-producers at a 15-pct DCFROR, f.o.b. port. 
The curves show that approximately 500 MMlt (61 pet) are 
potentially available from nine producers and 320 MMlt (39 
pet) from eight nonproducers. The curves show that at a 
total cost less than $0.25 per iron unit 75 MMlt of pellet 
feed are potentially available from producers and nearly 
100 MMlt from nonproducers. 

Approximately 208 MMlt of pellet feed are potentially 
available from seven deposits in South America (three of 
which are producers) at a total cost less than $0.28 per iron 
unit, a typical 1984 market price for pellet feed, f.o.b. port. 



Summary of Total Availability 



A summary of the total availability of the four iron ore 
products analyzed in this study is shown in table 14. The 
table shows total potential availability with producer and 
nonproducer availability. Also, the potential tonnage 
available at total costs that are less than or equal to a 
reference price, or market price is given. 



0.85 



I , -I — 



.75 



£ .65 

CO 

o 



.55 



o 
-o 

CD 



| .45 
o 

~3 



I- 
(/) 

O 35 
O 



< 
O 



.25 



.15 



I 



J 



=PT 



_L 



JL 



_L 



KEY 

Total 

Producers 

Nonproducers 



-L 



-L 



JL 



± 



100 200 300 400 500 

PELLET FEED, MMlt 



600 



700 



800 850 



Figure 1 1 .—Total potential pellet feed availability for producers and nonproducers in market economy countries at a 15-pct DCFROR. 



25 



Table 14.— Summary of total availability of iron ore products 

T . Potential tonnage 

' otai . , D . available at 

Product Number of Potential Heterence tota , cost [ess 

and status properties tonna 9 e P"ce. than or equal to 

available, $/ltu reference Drice 2 

MMIt MMit 

Sinter fines: 

Producers 40 6.6 0.28 3.6 

Nonproducers ... 33 12.0 .28 3.9 

Total (fig. 8) 73 18.6 0.22- .33 2.9 -10.4 

Lump ore: 

Producers 30 3.7 .24 2.0 

Nonproducers ... 11 1.2 .24 .230 

Total (fig. 9) 41 4.9 .26- .32 2.2 - 3.0 

Foreign pellets: 

Producers 25 2.70 .34 .390 

Nonproducers ... 6 .588 .34 .050 

Total (fig. 10A). . . 31 3.3 .34- .38 .350- .440 

Domestic pellets: 

Producers 11 3.2 .80 1 .90 

Nonproducers ... 30 8.2 .80 .260 

Total (fig. 1 0B). .. 41 11.4 .80- .86 2.1 -2.2 

Pellet feed: 

Producers 9 0.500 .28 .070 

Nonproducers ... 8 .320 .28 .140 

Total (fig. 11) 17 .820 .28 .210 

NAp Not applicable. 

1 Reference price is equivalent to various 1984 market prices in the interna- 
tional market. 
2 Total cost is in 1984 dollars determined at a 15-pct DCFROR. 



REGIONAL AVAILABILITY OF 
IRON ORE PRODUCTS* 



North America 



United States 



The iron resources of the United States are vast, 
whether measured in terms of tonnage of ore or in years 
of supply as compared with current annual consumption. 
The United States has an estimated resource of 108 billion 
It of crude ore containing 30 billion st of Fe (1). U.S. 
resources are primarily low-grade taconite-type ores of the 
Lake Superior district that require beneficiation and ag- 
glomeration to make them suitable for commercial use. 

The Lake Superior iron ore producing region is the most 
productive in the United States and includes parts of Min- 
nesota, Michigan, and Wisconsin. This region is one of the 
world's major sources of iron ore and contains most of the 
known iron ore resources of the United States. Between 
1891 and 1966 a total of 4.4 billon It of iron ore was pro- 
duced and shipped in the United States, with about 3.1 
billion It or 71 pet from the Lake Superior district. This has 
increased to over 95 pet in recent years. 

Table 7 shows that a total of 36.9 billion It of 
demonstrated resources in the United States were evaluated 
in this analysis. It should be noted that, of this total, the 
magnetic taconites in Minnesota contain subeconomic 
resources of 17.3 billion It. 

Other iron ore resources of the United States are widely 
distributed in several geographical regions. These are the 
Northeastern, Southeastern, Central-Gulf, Central- 
Western, and Western Regions, plus Alaska and Hawaii. 
Many of these areas no longer have producing mines and 
are considered as a resource only. Locations of some of the 

5 Reserves and resources information that appears in this text but is not 
referenced was supplied by F.L. Klinger, Division of Ferrous Minerals, and 
other Bureau of Mines sources. 



domestic deposits evaluated in this study are shown in 
figure 12. 

The Lake Superior region includes the Mesabi, Cuyuna, 
Vermillion, and Fillmore "ranges" in Minnesota, the Black 
River Falls and Baraboo districts in Wisconsin, the Gogebic 
Range in Wisconsin and Michigan, and the Marquette and 
Menominee districts in Michigan. These districts contain 
the principal iron ore deposits in the region. It should be 
noted, however, that most of these districts are no longer 
producing iron ore owing to the depletion of direct shipping 
natural ore and the advent of the pelletization of the lower 
grade taconite ores. Many properties in these districts are 
considered exhausted and do not contain any marketable 
ore under current economic conditions. As of January 1986, 
11 properties are producing pellets in the United States, 
including the underground Pea Ridge Mine in Missouri. 
(See table 7 for the operating status of the domestic mines 
evaluated in this study.) Locations of the Mesabi Range 
deposits evaluated in this study are shown in figure 13, and 
the deposits evaluated in Michigan and Wisconsin are 
shown in figure 14. 

Minnesota and Michigan have installed pellet produc- 
tion capacities of 62.7 and 18.7 MMlt/yr, respectively. The 
global recession and lack of demand for U.S. steel products 
has forced temporary closures of pellet producers for periods 
ranging from 5 weeks to 4 yr. During the period 1979-83 
the United States produced an average of 56.7 MMlt/yr 
pellets. Since this period included severe reductions in pro- 
duction, particularly in 1982 and 1983, it is not construed 
as being indicative of future levels of production. 

Other iron ore products— e.g., run-of-mine ore, coarse 
ore, fine ore, and sinter fines— amounted to only 7.6 pet of 
all U.S. shipments during the past 5 yr and have diminished 
steadily to 5.2 pet of all shipments and 3.3 pet of produc- 
tion in 1983. 

Since the late 1960's, pellets have been the primary 
blast furnace feed in the United States and Canada owing 
to the depletion of high-grade natural ores and construc- 
tion of pellet plants at the mines. The dominant role of 
pellets in this region is one of the major factors that 
distinguishes this market from most other iron ore markets. 
The production of iron ore pellets, an excellent blast fur- 
nace feed, has made the low-grade taconite ore reserves of 
the Lake Superior district a major source of iron for the 
Nation's steel mills. In 1984, pellets made up 95.9 pet of 
all iron ore products produced in the United States (2). 

Products from the iron ore mines in Minnesota and 
Michigan, and from most of the imports from Canada, are 
railed to docks on Lake Michigan, Lake Superior, or the 
Saint Lawrence River. Most of the loading docks are owned 
by the rail companies, which in turn are owned by the min- 
ing companies. As the shipping season generally runs from 
about April through December, because the lakes freeze in 
winter, there are large stockpiling and handling facilities 
at the docks where the pellets are stored during winter. 
From there, the pellets are shipped to docks on the lower 
Great Lakes nearest to the steel mills in Chicago, 
Cleveland, Detroit, and Pittsburgh. At the Lower Lake 
ports, the pellets are reloaded either into rail cars or into 
smaller boats capable of river navigation for the journey 
to the steel mills. This mode of water transportation for raw 
materials has enabled the heartland steel producers to re- 
tain a minor competitive edge over the other areas in the 
United States. Primarily due to the impact of transporta- 
tion charges, iron ore from the Great Lakes area is not cost- 
competitive with overseas ores unloaded on the Gulf coast 
or the East Coast of the United States. These markets do 
not compete much with each other any 



26 



Mountain'/- A. 



Buena 

V ^Modarelli 

■ Y" Day ton 

Pumpkin Ho/fowl 



Black Butte 



McCahill 



Eagle* 
Mountain \ 



f *x' 



PP* 



^ 




-\% 


»v 




\ Klukwon 




^A? 


Porf\/X- 

Snettisham 


^*" 







Atlantic 
$$City 

PP 



500 



1,000 

I 



-VERMILLION 
RANGE 



MESABI , 
RANGE 1 



,MARQUETTE 
..RANGEv. 



GOGEBIC I 
'RANGE 
[MENOMINEE^ 
RANGE 



Pea pp\ 

Ridge, - 



1 Camels 
\Hump 



Bourbon! 
District? 



Lone Star 



Mount Hopt) 



<> Big Sandy 

* \ 

Birmingham. 

\S,E Alabomoj 
y^Wistrict 



x 

D 

PP 



LEGEND 
Producing mine 
Post producer 
Undeveloped deposit 
Range area 
Pellet plant 



Scale, km 

Figure 12.— Location map, United States deposits 



'brand 
Ropids 









Bobbin 








\ Peter MitchellytsTJ, 








Ene.~-/h£ > \ 


£ * * 6 ' 




Minn toe 


/ Minorca ^rrTTTT/lr/ \ 


Nibbing 
National Steel J. JS-t 
Butter .fuZ-$y^*fob\ 


ng 


i^^ Eveletty 
1 — *~~*. PP V 


Thunderbtrd 
\ North and South 



Superior 
MINNESOTA | WISCONSIN 



Silver Boy 
PPyV 



Two 
Harbor J 



Taconite 
Harbor 






m 



LEGEND 
• City or town 
sfc Port 

X Producing mine 
PP Pellet plant 
H — i — I- Railroad 



Scale, km 



50 

_l 



Figure 13.— Location map, Mesabi range deposits. 



27 



SUPERIOR 



?^^y/yy?yy^^y?/y. 
ien ^Cascade ^-> 






LEGEND 


• 


City or town 


it 


Port 


ft 


Producing mine 


ft 


Past producer mine 


X 


Undeveloped deposit 


pp 

1 1 1 


Pellet plant 
• Railroad 



50 



J I I L 



Scale, km 



100 

_J 



Figure 14.— Location map, Wisconsin and Michigan deposits. 



28 



Pellets are potentially available from 41 mines and 
deposits located in the United States, 30 of which are non- 
producers. There are 11.4 billion It of domestic pellets poten- 
tially available at a 15-pct DCFROR, f.o.b. port. 

As discussed previously, the potential pellet availability 
of domestic producers and nonproducers is shown in figure 
106. Of the 11.4 billion It potentially available, 11 producers 
account for 3.2 billion It (28 pet) and 30 nonproducers for 
8.2 billion It (72 pet). The flat-lying portion of the non- 
producer and total curves is mostly composed of the vast 
tonnages from the magnetic taconite resources in Min- 
nesota. The 1984 domestic market price ranged from $0.80 
to $0.86 per iron unit. Approximately 1.9 billion It are poten- 
tially available from the producers and 260 MMlt from the 
nonproducers at a total cost less than or equal to $0.80 per 
iron unit. The producer curve shows that 1.3 billion It are 
available at a total cost less than or equal to $0.72 per iron 
unit, hence less than the total costs of any of the 
nonproducers. 

Figure 15 shows the potential availability of pellets from 
domestic iron ore surface mines presently in operation and 
mines permanently closed since 1981. Note that these 
curves represent operation at full production levels, while 
presently and in the recent past these iron ore mines have 
operated at much lower capacity levels. The producers con- 
sist of nine surface operations, seven in the Mesabi Iron 
Range and two in the Marquette Iron Range. There are ap- 
proximately 3.0 billion It of pellets available from the pro- 
ducers at a total cost less than $0.96 per iron unit. With 
1984 market prices at $0.80 per iron unit, there are approx- 
imately 2.0 billion It of pellets available at less than or equal 
to $0.80 per iron unit from producers and past producers. 

The mines that have permanently closed since 1981 in- 
clude one Menominee range mine (Groveland), one Mesabi 
range mine (Butler Taconite in Minnesota), one Wisconsin 
mine (Black River Falls in Wisconsin), and two Western 
U.S. mines (Eagle Mountain in California and Atlantic City 



in Wyoming). Also included in this category of permanently 
closed is one Marquette range mine (Republic in Michigan) 
that has been temporarily closed since 1981. These mines 
have approximately 320 MMlt available at total costs rang- 
ing between $0.75 and $1.06 per iron unit. With the past 
producers representing a small amount of available ton- 
nage, an 11-pct reduction in the availability of pellet ton- 
nage has occurred with the closures of these mines. 

The availability of sinter fines in the United States is 
not shown graphically, because only three of the mines 
evaluated in this study have potential production. With the 
potential for nearly 120 MMlt, the total cost range for sinter 
fines is between $0.84 and $1.20 per iron unit, f.o.b. port, 
and accounts for less than 1 pet of the total potential sinter 
fines availability in MEC's. 

The availability of domestic iron ore, as estimated in 
this report, is affected by several factors currently influenc- 
ing the iron and steel industries in general. Demand for 
iron and steel has been depressed on a global basis for the 
last several years and in turn, the low demand for iron ore 
has been particularly harmful to the domestic iron ore in- 
dustry. The U.S. iron ore industry continued to operate at 
less than 50 pet capacity in 1983, with most major mines 
being closed for part of the year. Despite low levels of pro- 
duction in 1982 and 1983, production of iron ore increased 
to 51 MMlt in 1984, or about 55 pet of capacity. Increased 
housing starts and an upturn in the auto industry have led 
to small gains in the demand for iron ore. 

In 1984, the U.S. iron ore industry had a total mine pro- 
duction of 51 MMlt, of which about 98 pet was pelletized 
before shipment. The iron ore was produced by 17 companies 
operating 21 mines, 17 concentrating plants, and 11 pelletiz- 
ing plants. The operations included 20 surface mines and 
1 underground mine. 

The effects of the recent recession on the domestic iron 
ore industry may be further compounded by the recent 
startup of the Carajas project in Brazil. Should port restric- 



I.IO 



T 



1.00 



o 

00 
CD 



D 

C 
D 

—> 



.90 



.80 



CO 

8 .70 



O 

t- 



.60 



KEY 

U.S. producers 

U.S. operations permanently 
closed since 1981 



.__T 



_, r 



0.5 



1.0 



1.5 2.0 

PELLETS, billion It 



2.5 



3.0 



3.5 



Figure 15.— Total potential pellet availability for selected domestic producers and operations permanently closed since 1981 at 
a 15-pct DCFROR. 



29 



tions be met, this development could lead to increased 
penetration of cheap foreign iron and steel into the domestic 
market, thus further lessening demand for U.S. iron ore, 
pig iron, and steel. 

The recession affected the United States most severely 
in 1982. While U.S. resources of iron ore are theoretically 
sufficient to supply all domestic demand for the foreseeable 
future, it is unlikely that they will be developed beyond a 
self-sufficiency level of about 75 pet. 

The current plight of the domestic steel industry has 
been blamed in part on cheaper foreign steel entering the 
United States; as a result, import quotas have been sought 
by the domestic industry to stem the flow of foreign steel 
into the country. However, other factors may have also 
played a role in the present economic conditions of the in- 
dustry, including (1) higher domestic wage structure ver- 
sus foreign competition, (2) the use of substitute materials 
such as plastics and aluminum, (3) a lag in modernization 
of facilities, (4) lower productivity levels of domestic plants 
versus foreign competition, and (5) long-range planning defi- 
ciencies. In view of the foregoing, further reductions in 
domestic iron ore production capacity are likely during the 
next few years. 

Canada 

The Canadian iron ore industry is characterized by a 
vertical integration of iron ore mines with parent mining 
and steel companies. A number of mines in Canada are 
predominantly controlled by U.S. mining and steel com- 
panies with minority ownership held by Canadian and 
European steel companies. 

The large open-pit operation of Sidbec-Nonmines Inc. 
in Quebec-Labrador was permanently closed in December 
1984, and the Griffith Mine at Red Lake, Ontario, was per- 
manently closed in April 1986. These latest shutdowns 
reduce the number of iron ore producers remaining in 
Canada to six, which is less than half the number of 10 yr 
ago. The primary cause of the cutbacks in the Canadian 
iron ore industry in recent years has been attributed mainly 
to the decline in demand of iron ore. In spite of relatively 
high production costs, productivity in Canadian mines is 
high with utilization of the best available technology. 

The vast Canadian resources of iron ore are capable of 
supporting Canadian and US. requirements for many years 
into the future. They are of special interest to the United 
States because of the present and continuing high degree 
of U.S. dependence upon Canadian iron ore. In 1984, Cana- 
dian shipments of iron ore to the United States totaled over 
12.6 Mmt, of which 62 pet went to the Great Lakes area 
and the rest to coastal ports. Overall production in 1984 
was 40.6 Mmt, of which 30.7 Mmt was exported. The other 
major export area is the European market, which accounted 
for 13.6 Mmt. Canada's production of iron ore in the past 
5 yr has consisted mainly of pellets and sinter fines. These 
two products have accounted for 50.1 pet and 40.8 pet of total 
shipments of Canadian iron ore. 

Reserves of iron ore in Canada are estimated at 25.3 
billion It containing 9.7 billion st Fe, with an average iron 
content of about 34 pet. Because of the low grades of the 
ore, most Canadian ore is beneficiated to a higher grade 
and is delivered to the steel mills either as oxide pellets 
made from concentrates or as a concentrate. In addition to 
reserves of 25.3 billion It, there are approximately another 
100 billion It of prospective resources of iron ore in Canada. 
The greatest proportion of the economic reserves are in 
northeast and central Canada. Iron deposits in western 



Canada are generally higher grade and smaller, require 
underground mining, lack transportation, or pose beneficia- 
tion problems. 

The four Canadian iron ore mines evaluated in this 
study have 6.2 billion It of demonstrated iron ore resources 
at an average grade of 34.7 pet. From these mines nearly 
933 MMlt of pellets are potentially available at total costs 
ranging from $0.86 to $1.03 per iron unit at a 15-pct 
DCFROR, f.o.b. port. An individual Canadian pellet avail- 
ability curve is not shown to prevent disclosing proprietary 
information. However, these properties were included 
previously in the total pellet availability curve. Figure 16 
shows the Canadian deposits evaluated in this study. 

Most iron ore transportation in Canada involves 
relatively long rail shipments plus long distances on the 
St. Lawrence Seaway from mines to mills. Railways con- 
nect Canada's iron ore mines in the Labrador Trough to 
terminal ports on the Gulf of St. Lawrence and use unit 
trains owned by iron ore producing companies. Most 
shipments in Ontario are carried on the rail networks of 
the Canadian National and the Canadian Pacific. Freight 
rates are lowest on company-owned railways, which ship 
the largest annual tonnage of iron ore. 

Large quantities of iron ore are carried on the Great 
Lakes-Gulf of St. Lawrence portion of the Seaway for ship- 
ment to both domestic and foreign markets. The most im- 
portant Canadian loading ports are located at Pointe Noire, 
Port Cartier, and Sept-Iles on the Gulf of St. Lawrence. 
These three ports account for all of Canada's shipments to 
Europe and nearly all of the exports to the United States 
and Japan. Most of the iron ore shipments from these ports 
to the United States are shipped through the St. Lawrence 
Seaway, with the remainder being shipped to U.S. east coast 
and gulf coast ports. 

Mexico 

Production of iron ore, iron ore concentrates, and iron 
ore agglomerates amounted to 8.0 Mmt in 1983, with 
estimates of 8.4 Mmt in 1984. Although down from a high 
of 8.7 Mmt in 1981, this level of production in 1983 was 
achieved in spite of the economic recession in Mexico, which 
was characterized by a large foreign debt, several drastic 
devaluations of the peso, an inflation rate approaching 100 
pet, severe unemployment, and a sharp reduction in new 
private sector investment. Mexico consumes all of its iron 
ore production internally and has, until recent years, been 
an importer of steel products to meet shortfalls in domestic 
production. In 1982 and 1983, however, reduced domestic 
demand for steel forced the steel companies to seek overseas 
markets for their products. 

Mexico's resources of iron ore are modest in comparison 
to those of most producing countries, but so far they have 
been adequate to satisfy domestic requirements. The total 
resources are estimated at more than 600 Mmt at an 
average grade of 57 pet Fe. The Consejo de Recursos 
Minerales (CRM) has been involved in a program of ex- 
ploration for iron ore and has identified 453 MMlt of iron 
ore reserves and 405 MMlt of additional resources at an 
average grade of 54 pet Fe. This represents less than 1 pet 
of total North American resources of iron ore. The five prop- 
erties in Mexico evaluated for this study contain over 460 
MMlt of demonstrated resources at an average grade of 46 
pet Fe. 

Iron deposits occur in many places in Mexico. About 35 
individual deposits or closely spaced groups of deposits con- 
taining more than 1 Mmt each are known. One group is 



30 




LEGEND 
• City or town 
X Port 

X Producing mine 
H Past producer 
PP Pellet plant 
-r— l — »- Railroad 



MAP LOCATION 



NORTH AMERICA 




I L 



500 



J I L 



Scale, km 



Figure 16.— Location map, Canadian deposits. 



31 



estimated to contain more than 130 Mmt. Most iron deposits 
in Mexico are massive deposits of the Kiruna and Magnit- 
naya types. Figure 17 shows the location of the Mexican 
deposits evaluated in this study. 

Mexico has continued to expand its iron ore concen- 
trating and pelletizing plants and by 1985 is expected to 
have a production capacity of about 17 Mmt/yr of iron ore 
products. Pellets will account for 14 Mmt/yr of this capa- 
city. Ore requirements for meeting this new capacity will 
be provided in part by the development of mines in 
Coahuila, Colima, and Michoacan. Continued growth of the 
iron ore industry will exert further pressure to find and 
develop new resources to supplement the present known 
resources; however, future importing of iron ore is still a 
distinct possibility after a 10- to 15-yr period, when 
resources are projected to be inadequate. 

The use of slurry pipelines to connect pelletizing and 
concentrating plants is rapidly becoming one of the major 



modes of iron ore transportation within the country. A 
379-km pipeline with an annual capacity of 4.5 Mmt con- 
nects the La Perla and Las Hercules Mines to a new pellet 
plant at Monclova in Coahuila, northeast Mexico. 

Of the four deposits evaluated in the study from which 
pellets are produced, 173 MMlt of pellets are potentially 
available within a total cost range of $0.49 to $0.97 per iron 
unit, f.o.b. port, at a 15-pct DCFROR. An individual 
availability curve for Mexico is omitted, but these deposits 
are included in the total pellet availability curve. 

South America 

The availability of the various iron ore products in South 
America was evaluated from a number of mines and 
deposits in Brazil, Venezuela, Chile, and Peru. Because of 
its importance in production and international trade of iron 
ore, Brazil is analyzed separately for sinter fines. The 




LEGEND 

• City or town 

^ Producing mine 

PP Pellet plant 

» » Slurry pipeline 

i i I Railroad 



500 
J I 



-N- 



Scale, km 



Figure 17.— Location map, Mexican deposits. 



32 



availability of the various iron ore products, as portrayed 
in the South American availability curves, consists of a com- 
bination of data from mines and deposits in Chile, Peru, 
and Venezuela. 

The availability curves for Brazil and other South 
American countries, shown in figure 18, indicate that sinter 
fines are available at a much lower cost than that of any 
of the other iron ore products. As of 1984, there are poten- 
tially 1.7 billion It (64 pet) of sinter fines available in Brazil 
from 13 producers. However, with the addition of the Cara- 
jas deposit production in 1985, this increased to approx- 
imately 2.7 billion It of sinter fines available at a total cost 
less than $0.35 per iron unit, f.o.b. port. This accounts for 
nearly 15 pet of the analyzed 18.6 billion It of potential 
sinter fines available in MEC's. 

The 1984 market price for Brazilian sinter fines was ap- 
proximately $0.26 per iron unit to Europe and $0.24 per 
iron unit to Japan, both f.o.b. port. Approximately 1.6 billion 
It of sinter fines are potentially available from 12 producers 
for less than $0.24 per iron unit. Similarly, approximately 
1.7 billion It of sinter fines are potentially available at less 
than $0.26 per iron unit. 

Five producers and five nonproducers in Chile, Peru, 
and Venezuela account for 7 pet of the total potential 
available sinter fines in MEC's. In these countries a total 
of 1.3 billion It of sinter fines are potentially available at 
a total cost range of $0.17 to $0.54 per iron unit. Four pro- 
ducers account for 178 MMlt (13 pet) at less than $0.25 per 
iron unit, f.o.b. port, at a 15-pct DCFROR. 

The Venezuelan sinter fines market price to Europe in 
1984 was approximately $0.33 per iron unit, c&f. Assum- 
ing that the freight rate to Europe is similar to that for 
Brazil in the 50,000- to 65,000-DWT class, the shipping rate 



would be $0.09 to $0.10 per iron unit. Therefore, the f.o.b. 
price would be $0.24 per iron unit. Below this price 225 
MMlt of sinter fines are potentially available from four pro- 
perties, three of which are Venezuelan. 

The market price for sinter fines from Chile and Peru 
to Japan in 1984 was around $0.21 per iron unit, f.o.b. port. 
At this price 225 MMlt of sinter fines are potentially 
available from four properties. 

There is approximately twice the amount of sinter fines 
in Brazil as in Chile, Peru, and Venezuela. Also, comparison 
of the potential availability of sinter fines in Brazil with 
that in the other South American countries shows that there 
are 1,600 MMlt of sinter fines potentially available in Brazil 
compared with 220 MMlt in the other South American coun- 
tries at less than $0.24 per iron unit, f.o.b. port, at a 15-pct 
DCFROR. 

Figure 19 compares the availability of sinter fines from 
Africa, Australia, and Brazil. The curves show the poten- 
tial available sinter fines up to 5.0 billion It. The vast 
amount of potentially available Brazilian ore, 2.7 billion 
It, at less than $0.35 per iron unit, f.o.b. port, further em- 
phasizes Brazil's position as a major supplier of iron ore in 
international trade in the future. Australia has a total of 
8.5 billion It of sinter fines potentially available with 5.0 
billion It available at less than $0.38 per iron unit, f.o.b. 
port. Africa has approximately 3.9 billion It of sinter fines 
potentially available; only 1.4 billion It is available at less 
than $0.38 per iron unit, f.o.b. port. 

Assuming an equal 1984 market price of $0.26 per iron 
unit for all three regions, there are potentially 1.7 billion 
It, 2.8 billion It, and 186 MMlt available, f.o.b. port, at a 
15-pct DCFROR, for Brazil, Australia, and Africa, 
respectively. 



0.55 



.50 



2 .45 



Q. 



O 

oo 



o 

C 
O 

~3 



CO 

O 
o 



< 
o 



.40 



.35 



.30 



.20 



.15 



.10 



KEY 

Other South American countries 



Brazil 




A 



I 



_,__] 



I 



i 



I 

I 

|_J 



J. 



_L 



J. 



500 



2,500 3,000 

Figure 18.— Comparison of total potential sinter fines availability for Brazil and other South American countries at a 15-pct DCFROR. 



1,000 1,500 2,000 

SINTER FINES, MMlt 



33 



0.80 



t .70 

c 

c 
o 



Q. 
if) 

_o 
o 

X) 

oo 

CD 



o 

3 
C 

o 

"3 



en 
o 
o 



.60 



.50 



.40 



.30 



KEY 
— Australia 
■■■ Brazil 
•— Africa 






.20 



- I 



_J 



10. 



_r 



JT^ 



x 



x 



x 



X 



X 



X 



X 



1,000 2,000 3,000 4,000 5,000 

SINTER FINES, MMIt 

Figure 19.— Comparison of total potential sinter fines availability for Australia, Africa, and Brazil at a 15-pct DCFROR. 



There is a close competitiveness between Brazilian and 
Australian sinter fines markets. As figure 19 shows, approx- 
imately 1.65 billion It of both Brazilian and Australian 
sinter fines are potentially available at less than $0.24 per 
iron unit. 

Brazil has the competitive advantage in the European 
market, while Australia has the competitive advantage in 
the Japanese market due to distances and shipping costs. 
This is illustrated in table 15 by comparing the 1984 market 
price and freight rates (per long ton) with the two major 
markets of Europe and Japan. In 1984 spot ocean shipping 
rates per long ton Fe for 64-pct-Fe ore from Brazil to Europe 
were $4.50 to $6.00 ($0.07 to $0.09 per iron unit) while 
Australian rates to Europe were $6.50 to $8.65 ($0.10 to 
$0.14 per iron unit). The rates per long ton Fe from Brazil 
to Japan were $7.00 to $9.00 ($0.11 to $0.14 per iron unit), 
compared with $5.00 to $6.00 ($0.08 to $0.09 per iron unit) 
from Australia to Japan. These are for bulk carriers in the 
100,000- to 150,000-DWT class. 

Potential availability of lump ore from Brazilian and 
other South American properties is compared in figure 20. 
Brazil has approximately 1.2 billion It of lump ore available 
at a 15-pct DCFROR, f.o.b. port, which comprise 25 pet of 
the total evaluated MEC available resources of lump ore. 
From the 14 Brazilian mines and deposits evaluated, the 
12 producing operations account for around 932 MMIt (78 
pet) of the available tonnage at less than $0.30 per iron unit. 
Because this study is based on 1984 production, the Cara- 
jas Mine in Brazil is not included as a producer. 

A total of 520 MMit of lump ore are potentially available 
from eight Venezuelan and one Chilean iron ore mines, at 
a 15-pct DCFROR, f.o.b. port. Approximately 167 MMIt (32 



Table 15.— Comparison of prices and freight rates for 

Brazilian and Australian sinter fines in 

European and Japanese markets 

(1984 dollars per iron unit, 64 pet Fe) 





To E 


.urope 


To Japan 


Supplier 


Price 
f.o.b. 


Freight 
rate 


Price 
f.o.b. 


Freight 
rate 


Brazil 

Australia 


0.26 
'.33 


0.07-0.09 
.10- .14 


0.24 
.26 


0.11-0.14 
.08- .09 



1 c&f rate. 

Source: The TEX Report Ltd; Industrial Minerals. 

pet) of lump ore are potentially available from four pro- 
ducers at less than $0.28 per iron unit. Again, it should be 
noted that the data of this study is 1984, at which time the 
Venezuelan San Isidro deposit was not in production. 

The market price for lump ore in Brazil and Chile for 
the Japanese market was approximately $0.24 per iron unit, 
f.o.b. port. Therefore, given this market price, approxi- 
mately 825 MMIt of lump ore are potentially available from 
eight producers and one nonproducer in Brazil at less than 
$0.24 per iron unit. In the other South American countries, 
approximately 280 MMIt of lump ore are potentially 
available at less than $0.24 per iron unit. 

Figure 21 illustrates the potential total availability of 
pellets and pellet feed in South America at a 15-pct 
DCFROR, f.o.b. port. The pellet curve shows that 1.0 billion 
It are potentially available from nine properties in Brazil, 
Chile, Peru, and Venezuela. Seven of these nine properties 
are producing and account for 955 MMIt of the potential 
available pellets. The 1984 market price for Brazilian 



34 



040 



CL 

o 

co 
en 



C 

o 



.36- 



.32 - 



.28 



CO 

O .20 
(_> 



< 

O 



16- 



.12 



- 


n — "i r "T - i i 1 i 


1 r 




1 1 


- 






- 


r~ 






- 


- 


i 

i ' 






- 


— 


1 
1 






— 


- 


, ■ 

r- 1 
I 






- 




1 
1 

, 1 

1 










--■"" 


1 


KEY 


- 


[ 1 




- 




Brazil 


— 


- 




Other South American 

countries 


- 


- 


1 1 1 1 1 1 1 1 


i i i i 





200 



400 



1,000 



1,200 1,300 



600 800 

LUMP ORE, MMIt 

Figure 20.— Comparison of total potential lump ore availability for Brazil and other South American countries at a 1 5-pct DCFROR. 



0.85 



.75- 



.b .65 



"o .55 

ao 
cn 



45 



co 

O 

o 
< 



35 



.25 



.I5 1 



J 



KEY 

Pellets 

Pellet feed 



r 



I 



x 



x 



_L 



_L 



200 



400 600 

AVAILABILItY , MMIt 



_L 



800 



1,000 1,100 
Figure 21.— Total potential pellet and pellet feed availability for South American countries at a 1 5-pct DCFROR. 



35 



pellets in the European market was $0.34 to $0.36 per iron 
unit, f.o.b. port. There are 442 MMlt of pellets potentially 
available at less than $0.38 per iron unit. 

The pellet feed curve illustrates that approximately 480 
MMlt are potentially available at a 15-pct DCFROR, f.o.b. 
port, from 11 properties in Brazil, Peru, and Venezuela. This 
constitutes approximately 59 pet of the 810 MMlt of poten- 
tial pellet feed available in MEC's. 

In this analysis five producers of pellet feed in South 
America accounted for 310 MMlt (65 pet) of the total poten- 
tial available pellet feed in MEC's, with 23 pet available 
for less than a total cost of $0.25 per iron unit. The Carajas 
Mine in Brazil and the San Isidro Mine in Venezuela began 
production in 1985, increasing the potential available pellet 
feed. With this addition there will be approximately 410 
MMlt (51 pet) of pellet feed available from producers, 42 
pet at less than $0.27 per iron unit, f.o.b. port. 

A 1984 market price for pellet feed was $0.28 per iron 
unit for pellet feed from Kudremukh, India, f.o.b. port. For 
comparison, approximately 208 MMlt of pellet feed from 
seven South American deposits are potentially available 
below this price, at a 15-pct DCFROR, f.o.b. port. 

Brazil 

Iron ore continues to be one of the most important 
minerals mined and exported from Brazil, making it a 
leading MEC exporter of iron ore. Until 1983, when gold 
surpassed iron ore as Brazil's number one source of min- 
ing revenue, iron ore led the country in the value of its min- 
ing or mineral production. It still accounts for over 90 pet 
of the value of its mineral exports. Along with Australia, 
Brazil is a leader in price negotiations, which have a signifi- 
cant impact on mines located in other parts of the world. 

Brazilian resources are located primarily in two 
States— Minas Gerais in the southern, more developed part 
of the country, and Para, in the northern, more remote and 
less developed Amazon region. The southern resources are 
found mainly in the Quadrilatero Ferrifero (Iron Ore 
Quadrangle), while those in the north are mostly found near 
the municipality of Maraba in the Carajas Range. Brazilian 
iron ore resources are estimated to be 40 billion mt, of which 
10 billion mt are contained iron in the measured category. 
Demonstrated resources of 5.3 billion It of iron ore (at 63 
pet Fe) were evaluated. 

The mines of the Iron Ore Quadrangle have provided 
virtually all of Brazil's production; they have been more 
easily exploited owing to their location and existing in- 
frastructure, while the Carajas deposits have been 
developed only recently. Figure 22 shows the location of 
deposits evaluated in Brazil for this study. 

The Carajas resources have been termed the "discovery 
of the century." The region contains not only vast resources 
of iron ore but many other mineral deposits primarily 
located within a 60-km radius. The potential resources of 
iron ore are estimated at 18 billion mt, grading 66 pet Fe, 
of which 1.3 billion It of demonstrated resources are 
evaluated. The State mining company, Cia. Vale do Rio 
Doce (CVRD), is the operator of the Carajas project. CVRD 
is one of the largest producers and exporters of iron ore in 
the world and, in 1981 accounted for 62.5 pet of the total 
Brazilian iron ore production of 98 Mmt. The Carajas proj- 
ect, at full capacity, is scheduled to produce 35 Mmt/yr of 
iron ore with the potential to eventually produce 50 Mmt/yr. 
Some 26.5 Mmt/yr have already been contracted for, 
primarily by Japan and European countries. 



In the 1970's, Brazil's steel industry made rapid growth, 
and as of 1981 the domestic steel industry was consuming 
about 20 pet of its iron ore production. Brazil's steel industry 
has continued to grow to meet increasing domestic demand; 
Brazil plans to become a major world steel producer and 
currently is the largest in South America. 

Brazil's major objective is to improve its balance of 
payments through, among other things, continued rapid ex- 
pansion of exports. The Carajas project forms a major part 
of the Government's strategy for achieving this end. The 
project, through the establishment of a basic transport 
system, may have a major impact in the future development 
of other minerals as well, such as manganese, copper, baux- 
ite, nickel, tin, and gold. 

Major infrastructure requirements for the huge Cara- 
jas project have been undertaken by the Government. An 
890-km railroad from the iron ore deposits to the port at 
Sao Luis on the Atlantic Ocean is nearing completion. The 
railroad has been designed to transport 35 Mmt/yr. The 
shiploading port will handle vessels up to 280,000 DWT and 
will be equipped to load ships at the rate of 16,000 mt/h. 
The combined cost of the railroad and port facilities amounts 
to about 60 pet of the total estimated project cost of $4.9 
billion. The project is being financed through resources of 
CVRD and the Brazilian Government and loan ar- 
rangements with various financial institutions including 
the World Bank and European, Japanese, and U.S. banks. 

The iron ore from the Carajas deposit is considered some 
of the world's best in terms of iron content, low silica, and 
metallurgical properties. It is predominantly high-grade 
sinter feed, which is in demand as an export product. 
Because of its high natural iron content, Carajas ore re- 
quires no beneficiation other than crushing and screening 
to produce sinter feed and pellet size lump ore. 

The second largest exporter of iron ore in Brazil is 
Mineracoes Brasilieras Reunidas S.A. (MBR), a private sec- 
tor company. MBR exported 10.6 Mmt and shipped 0.9 Mmt 
for domestic consumption in 1981 and planned to increase 
its production capacity to 25 Mmt/yr by 1986. 

Samarco Mineracao S.A. (SAMARCO) is a Brazilian cor- 
poration jointly owned by S.A. Mineracao da Trindade 
(SAMITRI) (51 pet) and Utah International Inc. (49 pet). 
SAMARCO owns and operates an open-pit mine capable of 
producing 10 Mmt/yr of iron ore. The mine, one of Brazil's 
largest, operates the world's biggest iron ore slurry pipeline. 

Four companies accounted for about 90 pet of all 
Brazilian shipments of iron ore, concentrates, and pellets 
in 1983, totaling 98.1 MMlt. The four major companies are 
CVRD, Ferteco Mineracao S.A., MBR, and SAMITRI. 

Venezuela 

Venezuela has about 2 billion It of crude iron ore 
reserves, most of which are situated in the Imataca belt. 
The deposits are of the Lake Superior type and follow the 
valley of the Orinoco River. The eight mines and deposits 
evaluated in this study have approximately 1.4 billion It 
of demonstrated resources at an average grade of 63 pet Fe. 
Figure 23 shows the locations of deposits evaluated in 
Venezuela for this study. 

Venezuela ranks second to Brazil in South America as 
a major producer and exporter of iron ore. In 1960, 
Venezuela was the major source of iron ore imported into 
the United States, surpassing Canada. It has since lost this 
position back to Canada and in the period 1979-83 furnished 
about 15 pet of all U.S. imports versus Canada's 67 pet. 



36 



t Tuboroo :£ 




LEGEND 
• City or town 
t Port 

^ Producing mine 
X Undeveloped deposit 
I l I Railroad 
» — » — Slurry pipeline 



500 1,000 
' I ■ ' ' I I 



2,000 

I 



Scale, km 



Figure 22. — Location map, Brazilian deposits. 



Specifically, exports to the United States decreased to 1.4 
Mmt in 1983, the lowest in over 30 yr. Production of iron 
ore overall has shown a steady decline in the past 10 yr, 
from 26 Mmt in 1974 to 9.6 Mmt in 1983. 

The iron ore industry is 100 pet nationalized and is 
under the control of the CVG Ferrominera Orinoco C.A. 
(FERROMINERA), which is part of Corporacion Venezolana 
de Guayana (CVG), the state-controlled development cor- 
poration for the Guayana Province, in which most of the 
iron ore is located. 

The iron ore mines of Venezuela were developed as cap- 
tive mines almost exclusively by two U.S. companies- 
United States Steel Corp. and Bethlehem Steel Corp. Prior 
to nationalization of the mines on January 1, 1975, most 
of the Venezuelan exports of iron ores were to these two 
companies on a captive basis, with 40 pet sold to Europe. 
It is unlikely that future exports of iron ore to the United 
States will be as significant as in the past, owing to 
Venezuela's increased domestic demand and reduced U.S. 
consumption. 

The long-range strategy of CVG is to increase the use 
of its own production of iron ore within the country for pro- 
duction of direct-reduced iron and steel. In 1982, total ex- 
ports of iron ore to all consumers was less than 7 Mmt while 
domestic consumption increased to 3.7 Mmt. The principal 
Venezuelan consumer of iron ore is Siderurgica del Orinoco 
C.A. (Sidor), the steelmaking subsidiary of CVG, at the 



Matanzas iron and steel plant, near Ciudad Guayana. The 
Matanzas plant, with a crude steel capacity of 4.8 Mmt/yr, 
is the world's largest integrated steelworks based mainly 
on direct reduction technology. 

FERROMINERA is now developing the high-grade San 
Isidro deposits, which contain nearly 390 Mmt of iron ore 
at an average grade of 64 pet Fe. This project is scheduled 
eventually to have a capacity of 5 Mmt/yr and will replace 
some of the production from the depleting Cerro Bolivar 
deposit. This will give Venezuela a potential capacity of 
about 24 Mmt/yr. 

Two main ports are used for shipping iron ore products: 
Puerto Ordaz and Palua. A major expansion of iron ore 
stockpiling, screening, shiploading, and railroading 
facilities at Puerto Ordaz has been completed for CVG FER- 
ROMINERA. Blending capacity has been doubled, and since 
increasing quantities of ore will ultimately be retained for 
domestic steelmaking, a high-speed railcar loading facility, 
capable of loading ore at the rate of 15,000 mt/h, has been 
constructed for shipment of ore to the Matanzas steel plant. 

Exports of iron ore from Venezuela are mostly sold 
under c&f terms as opposed to f.o.b. terms, in which approx- 
imately 85 pet of all iron ore on the international market 
is sold. The size of vessels and difficult navigational condi- 
tions are handicaps to Venezuelan exporters owing to 
limitations imposed by the Orinoco River, where maximum 
water depth varies from 9 to 13 m according to the season. 



37 



Vc''a"'r''/''b"b'"e'a'n\ 



wrrrrrrrrrr , Trrrrrrrrrrrrfrrr'?Trrrrrrrrrr''! , T 







LEGEND 
• City or town 
<t Port 

R Producing mine 
X Undeveloped deposit 
PP Pellet plant 



50 

I ■ ■ ■ i I 



100 



SOUTH AMERICA 



Scale, km 
Figure 23.— Location map, Venezuelan deposits. 



Chile 

In Chile, more than 100 deposits of iron ore are known, 
and resources are estimated at 900 Mmt with 220 Mmt of 
contained iron. Chile's iron ore lies mainly in a fault zone 
600 km long and 25 to 30 km wide, paralleling the Andes 



Mountains. The ore is mostly massive magnetite altered 
to martite. Demonstrated Chilean resources of over 140 
MMlt at 54 pet Fe were evaluated. Two deposits comprise 
this resource, the El Romeral and the El Algarrobo. Figure 
24 shows the locations of the evaluated Chilean and Peru- 
vian deposits. 






38 













"f/ Algarrobo 
^Guayocan 

^£7 Romeral 






ARGENTINA 



j Santiago 



V.V.V.V.V/.V.V.V.V.V.'AV.VAVAVl'Kv.-.-A-.-A-AVA VAV.VA V.VAV.V.V. 



LEGEND 
• City or town 
«t Port 

^ Producing mine 
PP Pellet plant 



200 
I 



400 
I u 



600 

I 



Scale, km 



MAP LOCATION 




SOUTH AMERICA 



Figure 24.— Location map, Chilean and Peruvian deposits. 



Iron ore output of Chilean mines has been steadily 
declining for the past 10 yr. Total production of iron ore, 
iron ore concentrate, and iron ore agglomerates dropped 
from 10.1 Mmt in 1974 to about 5 Mmt in 1983. Interna- 
tional and domestic recessions have had severe repercus- 
sions on Chile's main producing company, Cia. de Acero del 
Pacifico S.A. (CAP) (Pacific Steel Co.). Reduced sales to 
Japan, Chile's major customer for over 20 yr, have forced 
the company to offer three of its properties for sale. The 
outlook for the Chilean iron ore industry is one of 
diminishing capacity and exports owing to quality problems, 



low demand, and distance from markets. Productivity has 
decreased, partly as a result of nationalization, and it is 
unlikely that present capacity can even be maintained. The 
1984 production of iron by CAP was 3.4 Mmt of El Algar- 
robo pellets and 2.2 Mmt of lump ore and fines from El 
Romeral. Total shipments in Chile were 6.3 Mmt, consisting 
of 5.2 Mmt for export and 1.1 Mmt for consumption at 
Huachipato. 

Labor unrest has infiltrated the iron ore industry, 
primarily as a result of a synergistic effect from very mili- 
tant copper mining unions. The Chilean Government has 



39 



stabilized the situation recently, in recognizing the need 
for a stable mining industry. The current level of technology 
is limited, and it is unlikely that capital will be made 
available to modernize the industry, under its present 
depressed condition. 

Peru 

Large resources of high-grade iron ore are present in 
Peru, specifically the deposits of Marcona and Acari. The 
only iron ore mine operating is the Marcona Mine, about 
530 km south of Lima. The Empresa Minera del Hierro del 
Peru (Hierro Peru) owns and manages the Marcona Mine, 
which consists of numerous opencast pits. The ore, contained 
in several ore bodies, occurs as massive magnetite as well 
as hematite-martite. The proven reserves are estimated at 
600 Mmt containing 46 pet Fe. Evaluated in this study are 
over 1.4 billion It of demonstrated resources at 53 pet Fe 
at the Marcona Mine. Other minerals present in the ore 
are sulfides of cobalt, copper, and nickel. The company plans 
to recover copper and cobalt from the San Nicolas tailings, 
with the pyrite concentrate containing 0.25 pet Cu and 0.60 
pet Co. 

The product distribution of Peruvian iron ore is mostly 
in the form of high-grade sinter feed and pellets. The pro- 
duction capacity of the Marcona facilities is rated at 7.5 
Mmt/yr. In 1984, Marcona produced 3.87 Mmt of iron con- 
centrates. Production of iron ore in Peru has declined stead- 
ily, falling from 9.4 Mmt in 1973 to an estimated 4.4 Mmt 
in 1983. The tonnage is produced mainly for export to the 
Republic of Korea, Japan, and Europe. Domestic consump- 
tion has been modest, with approximately 480,000 mt of 
mostly pellets consumed in 1983 by the Chimbote iron and 
steel plant. 

Hierro Peru is discussing trade agreements with poten- 
tial customers in Europe in an attempt to increase its ex- 
ports of iron ore. It is also considering capital expenditures 
to reduce the sulfur and alkali content of its iron concen- 
trates to make its products compatible with increasingly 
stringent environmental standards of many of the import- 
ing countries and to make its ore more competitive with 
other low-sulfur ores. An expansion of port facilities at San 
Nicolas to accommodate vessels up to 250,000 DWT, instead 
of the 160,000 DWT now being used, is also under study. 
Another possibility being explored, to enhance its iron ore 
industry, is the trading of iron ore with Yugoslavia in ex- 
change for locomotives and railroad cars. 



Australia and New Zealand 

Australia has a vast reserve base of iron ore, estimated 
at 33 billion It containing 20.2 billion st Fe. Australia pro- 
duced an average of 89.2 MMlt/yr of iron ore products in 
the 10-yr period of 1974-83. Over 11 billion It of demon- 
strated resources of iron ore at an average grade of 60 pet 
Fe were evaluated in this study. 

The main customer has been Japan, and the industry's 
installed export capacity of about 100 MMlt was primarily 
built to meet Japanese contract requirements. Other 
markets are also becoming increasingly important for 
Australian iron ore as larger orders are being placed from 
Taiwan, the Republic of Korea, and China. Shipments to 
Taiwan and the Republic of Korea were significantly higher 
in 1982, as steel output in those countries continued to ex- 
pand, in contrast to the world trend. Exports of iron ore to 
China appear to offer the greatest prospect of long-term 



growth in the Australian industry. A $200 million joint ven- 
ture mine is being considered in the Pilbara district to 
ultimately produce 10 Mmt/yr for the Chinese. The export 
trade is based on the iron ore reserves of the Pilbara district 
of northwest Western Australia. The major ports exporting 
ore are Dampier, Port Hedland, and Port Walcott. 
Evaluated deposits within the Pilbara district in the study 
are shown in figure 25. In this area, five major companies 
produce about 90 pet of Australia's total iron ore output: 
Hamersley Iron Pty Ltd., Mount Newman Iron Ore Pty Ltd., 
Cliffs Western Australia Mining Co., Robe River Iron 
Association, Goldsworthy Mining Ltd., and Broken Hill Pty 
Ltd. 

High-grade lump ore is a major product of Australian 
mines, accounting for over 50 pet of the production from 
the producing mines in 1982. Australia continues to be a 
dominant producer and exporter of iron ore on the world 
scene despite being plagued by a history of strikes and bad 
industrial relations from the inception of the industry in 
the country. However, once the mines are operating, labor 
productivity is quite high, with the large-scale open pit 
mines utilizing the best available technology. High wages 
and high turnover rates among the labor force are common 
to the industry. 

Pellet plant operations have been suspended by the 
Hamersley and Robe River companies due to high fuel costs. 
The possibility of restarting the Dampier pellet plant has 
been ruled out due to the poor potential for long-term 
markets. The plant has a capacity of 3.0 Mmt/yr, and the 
Cliffs-Robe River plant has a capacity of 5.0 Mmt/yr. The 
Savage River and Whyalla pellet plants continue to operate. 
The locations of the Middleback Range and Savage River 
deposits are shown in figure 26. 

Australia is one of the lowest cost producers of iron ore 
in the world today, making its operations very competitive 
on the world market. This is attributable to several 
factors— large, high-grade deposits; high production; highly 
automated nature of the industry in both mining and ship- 
ping; and short distances to Japanese markets. 

Sinter fines are potentially available from 19 of the 20 
mines and deposits evaluated in Australia. Figure 19 shows 
5.0 billion It of a total of 8.5 billion It of sinter fines 
available, accounting for nearly 46 pet of the total available 
sinter fines in MEC's. This tonnage is available within a 
total cost range of $0.16 to $0.38 per iron unit at a 15-pct 
DCFROR, f.o.b. port. 

Of the five producers, four have total costs less than 
$0.24 per iron unit and contain nearly 1.4 billion It (16 pet) 
of the potentially available sinter fines in Australia. The 
14 nonproducers account for a total of 7.1 billion It (84 pet) 
of sinter fines potentially available within a total cost range 
of $0.24 to $0.38 per iron unit at a 15-pct DCFROR, f.o.b. 
port. 

Australian prices for sinter fines in Europe in 1984 were 
$0.33 per iron unit, c&f. Spot freight rates in 1984 from 
Australia to Western Europe were $6.50/mt to $8.75/mt, or 
$0.10 and $0.14 per iron unit, assuming 64 pet iron. At a 
market price of $0.33 per iron unit and a $0. 10 per iron unit 
freight rate, an f.o.b. price would be approximately $0.23 
per iron unit. At this market price there are 1.4 billion It 
of sinter fines potentially available. 

Approximately 2.6 billion It of sinter fines are poten- 
tially available at less than the 1984 price for Australian 
sinter fines to Japan of around $0.26 per Fe unit, f.o.b. port. 
Freight rates ranged from $5.00/lt to $6.00/lt in 1984 from 
Australia to Japan, which is approximately equivalent to 
$0.08 to $0.09 per iron unit at 64 pet Fe. Therefore, it is 



40 




LEGEND 

• City or town 

i Port 

X Producing mine 

X Undeveloped deposit 

PP Pellet plant 

i i i Railroad 



MAP LOCATION 




AUSTRALIA 



100 
l I 



200 



300 



Scale, km 



Figure 25.— Location map, Western Australian deposits. 



estimated that the total cost could be as high as $0.35 per 
iron unit. 

Approximately 1.4 billion It of lump ore are potentially 
available from six mines within a total cost range of $0.18 
to $0.43 at a 15-pct DCFROR, f.o.b. port. This availability 
is not shown graphically because of the small number of 
properties and to ensure confidentiality. Australian 



resources account for 29 pet of the total lump ore available 
in MEC's. Three producers account for 82 pet of this poten- 
tially available ore at less than $0.27 per iron unit. 

Australian iron ore prices for lump ore in 1984 were ap- 
proximately $0.36 per iron unit, c&f, to Europe. As dis- 
cussed earlier with sinter fines, freight rates to Europe in 
1984 ranged between $0.10 and $0.14 per iron unit. 



41 



SOUTH AUSTRALIA 



Middleback 
Range**. 



NEW SOUTH WALES 




1 1 m ri 1 1 1 1 1 r • • t ' 



I I I I I I II I T r T T I I I I 



LEGEND 
• City or town 
£ Port 

^ Producing mine 
PP Pellet plant 
H — I — i- Railroad 



MAP LOCATION 








500 



AUSTRALIA 



J 1 I L 



Scale, km 

Figure 26.— Location map, Southern Australian deposits. 



Therefore, it is estimated that an f.o.b. price would be ap- 
proximately $0.26 per iron unit. Approximately 1.1 billion 
It of lump ore are potentially available at a total cost of 
$0.40 per iron unit, f.o.b. port. 

Prices to Japan were approximately $0.31 per iron unit, 
f.o.b. port. At a total cost of $0.31 per iron unit approxi- 



mately 1.3 billion It of lump ore are available, f.o.b. port. 
At a freight rate of $0.08 to $0.09 per iron unit (64 pet Fe) 
the total cost to the buyer could be as high as $0.40 per iron 
unit. 

The North Island of New Zealand contains beach sand 
deposits of titanomagnetite derived from volcanic rock. It 



42 



is estimated that more than 1.0 billion mt of 
titanomagnetite occur in seven deposits along the west coast 
of North Island. The location of the Waipipi deposit is shown 
in figure 27. Total exports of ore from New Zealand to Japan 
range from 2 to 3 Mmt/yr. Waipipi Ironsands Ltd. exports 
nearly 1.0 Mmt/yr to Japan, partly because of the demand 
for Ti0 2 in newly lined blast furnaces. Additions of 5 to 7 
kg titaniferous ore per metric ton of iron to the blast fur- 
naces aids oxygen removal and extends the life of the blast 
furnace refractory linings. With several long-term contracts 
with Japan and its own steel industry, the iron ore industry 
of New Zealand continues to survive despite its small scale 
and geographic location. 

Europe 

The availability of iron ore in Europe was evaluated 
from deposit data from four countries— Sweden, Norway, 
Spain, and Portugal. Other European MEC's as well as the 
U.S.S.R. and other CPEC's were excluded from the study. 
The criterion for the selection of the deposits was whether 
an individual property might have an impact on actual 
availability and have the potential to produce for interna- 
tional trade. Therefore, countries such as France and the 
Federal Republic of Germany, which use most of their iron 
ore internally, were not included. Because its ore is low 
grade and beneficiation processes are designed accordingly, 
France imports nearly half of its ore from other sources. 

The European desposits evaluated contain an estimated 
2.5 billion It of demonstrated resources containing 46 pet 
Fe. While an availability curve was not constructed for 
Europe, the potential pellet availability for four mines 
ranges between 242 and 490 MMlt at a total cost range of 
$0.55 and $1.23 per iron unit, f.o.b. port, at a 15-pct 
DCFROR. 

The 1984 market price for Swedish and Norwegian 
pellets in Europe was approximately $0.38 per iron unit, 
f.o.b. port. All the European properties evaluated for pellets 
in this study have higher total costs per iron unit than the 
market price of $0.38 per iron unit. This is an example of 
how Government support through ownership and subsidies 
can keep these producers in the marketplace. 

Four evaluated iron ore properties in two European 
countries account for 11 pet of the total 4.9 billion It of lump 
ore potentially available in MEC's. This availability is not 
illustrated graphically because of the small number of prop- 
erties and to ensure confidentiality. There are approxi- 
mately 475 MMlt of lump ore potentially available from pro- 
ducing mines within a total cost range of $0.19 to $0.59 per 
iron unit, f.o.b. port. 

Sweden and Norway 

Sweden was one of the first countries to develop its iron 
ore resources for the export market. Demonstrated resources 
of 2.0 billion It were evaluated from three properties in 
Sweden. Sweden's reserve base is nearly 4.6 billion It of 
crude ore. 

The iron ore deposits of Northern Sweden, north of the 
Arctic Circle, contain some of the world's most important 
sources of high-grade iron ore The ore bodies of the Kiruna 
district— Kirunavaara, L'lossavaara, Malmberget, and 
Svappavaara— account for over 90 pet of Swedish exports 
and approximately 60 pet of domestic deliveries. The other 
major source of Swedish iron ore is the Grangesberg area 
in central Sweden, with the principal mines about 150 km 
west of Stockholm. Deposit locations of properties evaluated 



in Sweden and Norway are shown in figure 28. The ore 
types found in Sweden are banded iron quartzites, apatite 
iron ores, calcareous high-manganese ores, skarn ores, and 
titanomagnetites. 

Sweden's iron ore production is dominated by 
Luossavaara-Kirunavaara AB (LKAB), a Government- 
owned company and one of the world's five largest export- 
ing companies. LKAB produces 80 pet of Sweden's iron ore 
from three mines north of the Arctic Circle. Two of the 
mines, Kiruna and Malmberget, are underground sublevel 
caving operations. The third, Svappavaara, an open pit 
mine, has not been in operation for some time. Over 90 pet 
of Swedish iron ore comes from underground mines, 
whereas in the rest of the world open pit mining accounts 
for 85 pet of all production. 

Ore from the mines of northern Sweden is transported 
by rail to the ports of Narvik in Norway and Lulea in 
Sweden. The iron ore railway from Lulea to Narvik, owned 
and operated by the Swedish and Norwegian State 
Railways, covers 435 km in Sweden and 39 km in Norway. 

Declining export demand for Swedish iron ore resulted 
in 1982 shipments approaching the 1949 level. Sweden ex- 
ported 12.7 Mmt in 1982, and domestic consumption was 
2.4 Mmt. Production from Swedish mines has steadily 
declined from 36.4 Mmt in 1974 to 15.9 Mmt in 1982. Mines 
in Sweden were shut down for 10 to 15 weeks, and the new 
pelletizing plant at Kiruna, with a 3-Mmt/yr capacity, was 
utilized at only 40 pet of capacity during 1982. Other pellet 
plants at Malmberget and Svappavaara bring LKAB's total 
pellet plant capacity of 9.0 Mmt. 

The total shipping capacity of the ports that LKAB 
utilizes is 39 Mmt/yr— 30 Mmt/yr at Narvik and 9 Mmt/yr 
at Lulea. The port of Narvik can accommodate two 100,000- 
DWT vessels at the older quays and a 350,000-DWT vessel 
at the new quay. The port is ice-free year round, whereas 
the port of Lulea is closed by ice for 5 months. Lulea has 
an ore storage capacity of 5 MMlt. 

With the long-range trend toward a rising world pro- 
duction of iron ore, mostly from large open pits, 
underground Swedish mines face stiff competition. Despite 
having large resources of high-grade iron ore, Sweden's 
future in the world commerce of iron ore remains tenuous. 
Several reasons exist, including possibly higher production 
costs because of the high proportion of underground mines 
as opposed to open pits, higher labor rates, and social costs. 
Another major competitive problem, which will not disap- 
pear even if the demand for iron ore increases significantly, 
is the high phosphorus content of much of Sweden's 
magnetite ore reserves. The ores of the Kiruna district 
average between 1 and 2 pet phosphorus (P) and 60 to 68 
pet Fe. The change in steelmaking technology has resulted 
in a move away from these ores, and only six steel plants 
in Europe now accept such material. Because the high 
phosphorus content in the ore increases beneficiation costs, 
a smaller amount of this type of ore is being produced each 
year. In the last 10 to 15 yr, however, progress has been 
made in recovering the waste P 2 5 and developing this into 
a fertilizer industry. 

On the positive side, Sweden has a very stable labor 
force and has been a world leader in the development of new 
equipment and technological innovations in mining 
methods and ore processing. These factors, including inex- 
pensive ocean freight costs, along with ample resources, 
may help Sweden to retain some of its share of the iron ore 
market. 

Reserves and resources of iron ore of the Lake Superior 
type exist in northeast and central Norway. Norway had 



43 



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Christchurch ivXvXJxjxJx 



PACIFIC 









■Tbunedin :£x;xjx::Xx:x:x::X:Xx::::::x£ 


o'c 


e'a'n 



LEGEND 
• City or town 
t Port 
R Producing mine 



100 200 300 
I i ' ■ ■ I I | 



Scale, km 



Figure 27.— Location map, New Zealand deposit. 



44 



I I I I I I I I I I I I I I H -WW^W^^I^WT 




LEGEND 
• City or town 
t Port 

R Producing mine 
PP Pellet plant 
I I I Railroad 



100 

i 



200 



300 



Scale, km 



Figure 28.— Location map, Northern European deposits. 



a production capacity of about 4 Mmt/yr as of 1982 and con- 
tains 400 MMlt of iron resources (14). The 150,000-mt/yr 
Rodsand Mine was closed during 1982. In 1982 Norway's 
production was about 3.5 Mmt, and exports totaled 2.2 Mmt. 
Production was evenly divided between pellets (1.8 Mmt) 
and concentrates (1.7 Mmt). Sydvaranger, the only 
Norwegian mine evaluated, contains over 187 MMlt of 
demonstrated iron ore resources. 

During the 10-yr period 1973-82, Norway's production 
of iron ore, iron ore concentrates, and iron ore agglomerates 
averaged 3.7 Mmt/yr. Norway's exports of iron ore during 



1980-82 averaged over 75 pet of its total production; the 
main customers are the Federal Republic of Germany and 
the United Kingdom, with about 40 pet each. 

Spain and Portugal 

The iron ore resources of Spain are estimated near 750 
Mmt (14). Spain has produced an average of 8.2 MMlt/yr 
of iron ore products for the past 10 yr. The primary produc- 
ing mine has been the Marquesado, owned by Cia. Andalusa 
de Minas S.A. (CAM). The mine is an open pit containing 



45 



130 Mmt of geological reserves averaging 55 pet Fe with 
45 Mmt designated as mining reserves. The Marquesado 
property had almost 34 MMlt of demonstrated resources in- 
cluded in this study, with a capacity of 3.5 Mmt/yr. The 
mine has produced an average of 2.7 Mmt/yr of iron ore 
since 1971, representing about 35 pet of Spain's entire pro- 
duction on an annual basis. Sinter fines comprise about 95 
pet of the production, with lump ore making up the balance. 
The other major producers in Spain are Cia. Minera de 
Sierra Menana and Altos Hornos de Vizcaya S.A. The loca- 
tions of Spanish and Portuguese deposits evaluated in the 
study are shown in figure 29. 



Spain exported 23 pet of its iron ore production in 1980 
and 13 pet in 1981. The primary destinations for its pro- 
ducts were the Netherlands, the Federal Republic of Ger- 
many, and Romania. In contrast, the rapid increase in both 
output and domestic consumption of steel has made Spain 
a net importer of iron ore, and in 1980 and 1981 imports 
amounted to 4.8 and 4.7 Mmt, respectively. Main suppliers 
were Brazil, Venezuela, and Liberia. 

The age and low capacity of port facilities at Almeria, 
built in 1914, have played a major role in keeping produc- 
tion capacity of CAM down. This situation, coupled with 
a 100-km rail transportation route through mountainous 




•-*••••••••' * 



tJ^^JJJJJJ^JJJJ^^jJJJJJ^J^JJjJJJJJuU^+^ll n t HI V6+mm+**++* 



LEGEND 
• City or town 
& Port 

^ Producing mine 
X Undeveloped deposit 
H — I- Railroad 



1 00 200 
_l L_ 



300 



Scale, km 



Figure 29. — Location map, Spanish and Portuguese deposits. 



46 



country with severe gradients and curves, has been a very 
limiting factor. However, port facilities have been improved 
and new loading equipment makes it possible to handle 
vessels up to 90,000 DWT. Therefore, the throttling effect 
of inadequate port facilities is no longer a factor in limiting 
production from the Marquesado Mine. It is now conceivable 
that a production rate of 4 to 5 Mmt/yr is possible with the 
construction of additional treatment facilities to cope with 
quality fluctuations in the ore deposit. 

Portugal has rather limited resources of iron ore, when 
placed in context with other major iron ore producing coun- 
tries in Europe, with reserves of 600 Mmt and a mean iron 
content of 37 pet Fe (14). The Moncorvo deposit is the largest 
and has measured reserves of 200 Mmt with another 500 
Mmt of inferred ore. Over 240 MMlt of demonstrated 
resources at 37 pet Fe were evaluated. Development of this 
deposit has been considered by the Portuguese Government 
for at least 10 yr but has recently been slowed by a lack 
of markets and beneficiation problems. Construction of a 
major rail line, connecting the deposit to the rest of the coun- 
try, has been deferred. Along with infrastructure problems 
the high phosphorus content of the ore presents beneficia- 
tion problems that may preclude the production of an in- 
ternationally marketable concentrate or iron ore pellet. The 
Moncorvo deposit has a potential production capacity of 4 
Mmt/yr pending resolution of the aforementioned problems. 
Over the period 1974-82 Portugal produced an average of 
54,000 mt/yr of iron ore. Imports of iron ore were 495,000 
and 524,000 mt in 1980 and 1981, respectively, and came 
from Africa and Venezuela. 

Africa 

Africa has an estimated 14.6 billion It of iron ore in its 
reserve base with over 7.6 billion It of contained iron (1). 
This relatively low figure for such a large continent is at- 
tributable to the fact that many areas in Africa have not 
been thoroughly explored for iron ore and are therefore 
credited with low reserves. 

In this availability study, 19 deposits (7 producing and 
12 nonproducing) with demonstrated resources totaling over 
8.0 billion It Fe in 11 African countries were investigated. 
Many of these countries are considered underdeveloped, and 
rail transportation and infrastructure development would 
open up the country to commerce and trade not only in iron 
ore but for other commodities as well. In some instances, 
particularly Liberia and Mauritania, iron ore is the main 
source of revenue for the country. 

The African iron ore mines and deposits are 
predominantly sources of sinter fines. As illustrated in 
figure 19, nearly 3.9 billion It of sinter fines are potentially 
available, accounting for approximately 20 pet of the 18.6 
billion It of sinter fines available in MEC's. 

Of the 17 African properties evaluated, 8 are currently 
producing sinter fines and 9 are potential producers of sinter 
fines. The producers account for approximately 966 MMlt 
(24 pet) of sinter fines potentially available at a 15-pct 
DCFROR, all for less than $0.40 per iron unit, f.o.b. port. 
The nonproducers account for the remaining 2,980 MMlt 
(76 pet), which are available at a 15-pct DCFROR within 
a total cost range of $0.30 to $0.79 per iron unit, f.o.b. port. 

The 1984 prices for sinter fines from the Republic of 
South Africa to Europe ranged from $0.21 to $0.24 per iron 
unit, f.o.b. port, while from Mauritania and Liberia prices 
to Europe were $0.28 per iron unit, f.o.b. port. It should be 
noted that the South African prices were from spot fixtures 
and included some demerits for high alkali. Given these 



market prices, potentially 186 MMlt of sinter fines are 
available for less than $0.28 per iron unit, f.o.b. port, in 
Africa from three producing properties. 

The market price for sinter fines from the Republic of 
South Africa to Japan in 1984 was approximately $0.24 per 
iron unit, f.o.b. port, while from Liberia it was around $0.22 
per iron unit, f.o.b. port. Approximately 141 MMlt of sinter 
fines are potentially available at less than $0.24 per iron 
unit. 

Because of the small number of African properties 
evaluated in the study that produce lump ore and to ensure 
confidentiality, a curve for lump ore is not shown. Three 
mines in three African countries contain a total of 911 MMlt 
of lump ore potentially available, which accounts for 19 pet 
of the total lump ore potentially available in MEC's. These 
range between 597 and 910 MMlt in a total cost range of 
$0.38 to $0.59 per iron unit, f.o.b. port. Lump ore is poten- 
tially available at the Simandou deposit in Guinea and the 
Faleme Area deposit in Senegal, and is produced at the 
Sishen Mine in the Republic of South Africa (figs. 30-31). 

There are 512 MMlt of pellets potentially available in 
four African countries from five mines. Pellets are available 
from two producers and three nonproducers within a total 
cost range of $0.51 to $1.04 per iron unit, f.o.b. port, at a 
15-pct DCFROR. 

Pellet feed is currently being produced at only one pro- 
ducing mine, located in Liberia. Other potential sources are 
the Simandou deposits in Guinea and the Guelbs deposit 
in Mauritania (fig. 32). Combined, there is a potential 
availability of 156 MMlt of pellet feed at a 15-pct DCFROR, 
f.o.b. port, within a total cost range of $0.43 to $0.84 per 
iron unit. This accounts for approximately 19 pet of the total 
potential availability of pellet feed in MEC's. 

A 1984 market price for pellet feed was $0.28 per iron 
unit from Kudremukh, India, f.o.b. port. From the analysis 
in this study, pellet feed in Africa is available at a cost level 
approximately 35 pet higher than this market price. 

African pellet costs are generally higher than for other 
sources of pellets, with several reasons being paramount: 
higher infrastructure costs involved with railroad and port 
construction; the higher cost of pelletizing hematite ores; 
individual country economics; and the fact that state-of-the- 
art technology in mining and ore treatment processes is not 
as well developed as in most of the industrialized nations. 

Liberia 

Liberia has extensive resources of iron ore and ranks 
second to the Republic of South Africa in production of iron 
ore. Known reserves are reported at 1.6 billion It contain- 
ing about 45 pet Fe. For this study, nearly 1.7 billion It of 
demonstrated resources were evaluated from six mines and 
deposits in Liberia. It is very likely that resources are much 
greater than have been identified. 

All of Liberia's production of iron ore is exported because 
the country has no iron or steel production. Iron ore con- 
tinues to be the major export commodity, and in 1982 ac- 
counted for about 50 pet of all its exports. Liberia has pro- 
duced an average of 19.1 MMlt/yr for the 10-yr period 
1974-83, although in the last few years production was lower 
owing to the worldwide recession. 

With the mounting financial difficulties of the Liberian 
mines, the likelihood for expansion of existing mining opera- 
tions appears slim. The two nonproducing properties, Bea 
Mountain and Wologisi, contain about 933 MMlt of 
demonstrated resource averaging 34 pet Fe. These two prop- 
erties are possible locations for opening new mines when 



47 




LEGEND 
• City or town 
i Port 

^ Producing mine 
K Past producer 
X Undeveloped deposit 
PP Pellet plant 
^ » Proposed slurry 
H — J— »- Railroad 



AFRICA 





I ' l l I 



100 200 300 



Scale, km 



Figure 30.— Location map, Western African deposits. 



48 



NAMIBIA 



B OT S WANA 




LEGEND 
• Cityortown 
I Port 

X Producing mine 
h — i — i- Railroad 



500 

j i i i I 

Scale, km 



MAP LOCATION 




Figure 31 .—Location map, South African deposits. 



market and financial conditions are satisfactory. In 1982, 
engineering and management contracts were signed to 
begin development of the high-grade Mifergui-Nimba proj- 
ect in neighboring Guinea. This deposit is an extension of 
the Mount Nimba deposit currently being worked by the 
Liberian American-Swedish Minerals Co. (LAMCO) at 
Mount Nimba, Liberia. Owing to the distance from any port 
in Guinea, the Mifergui-Nimba project was found to be 
uneconomical unless existing rail and port facilities in 
Liberia could be used. The geology, mining, and beneficia- 



tion processes would all be the same as Mount Nimba, mak- 
ing the development of this project all the more attractive. 
This project has the potential to produce 15 Mmt/yr of high- 
grade iron ore. The locations of the west African deposits 
evaluated in this study are shown in figure 30. 

Another development that was considered was the con- 
struction of a 105-km rail linkage between the LAMCO 
railway and the Bong Mining Co. facilities to process LAM- 
CO's Western Area deposit at Bong. A later EEC study, 
however, found the cost to be prohibitive. 



49 



Republic of South Africa 

Since 1977, the Republic of South Africa has emerged 
as the leading producer of iron ore products in Africa, sur- 
passing Liberia. Known reserves amount to 9.3 billion It, 
of which approximately 1.3 billion It of demonstrated iron 
ore resources were evaluated. South African iron ore pro- 
duction has averaged 21.3 MMlt/yr for the past 10 yr. The 
worldwide recession resulted in a decline in production to 
a low of 16.3 MMlt in 1983, but production rose to 21 MMlt 
in 1984. Coupled with the slackening demand on a global 
basis, the South African economic growth rate is slowly 
leading to a reduced demand for steel. 

Earlier plans for exploiting taconite-type deposits in the 
northern Transvaal and the byproduct magnetite produced 
by Palabora Mining Co. Ltd. (PMC) are stalled. There were 
plans to use Palabora magnetite ore in a 600,000-mt/yr 
pellet plant under construction at Vereeniging. 

The major producing mine in the Republic of South 
Africa is the Sishen Mine, owned and operated by the 
Government-owned South African Iron and Steel Industrial 
Corp., Ltd. (Iscor). The mine, with a capacity of 27 Mmt/yr, 
produces 60 pet lump ore and 40 pet sinter fines, averag- 
ing 64 pet Fe. Approximately 70 pet of Sishen's ore is 
transported 861 km by a company -owned electrified railroad 
to the port at Saldanha Bay. Domestic industry uses the 
remaining 30 pet, which is transported 690 km by rail to 
steelworks at Vandeslylpark and 1,005 km to steelworks 
at Newcastle. The deposit location is shown in figure 31. 

South African exports of iron ore amounted to about 50 
pet of its total production in 1980 and 1981. The principal 
destinations were Japan and the Federal Republic of Ger- 
many. The port facilities at Saldanha Bay were built 
primarily for iron ore exports. Saldanha Bay is the deepest 
port in Africa and capable of handing vessels up to 350,000 
DWT. 



Other African Countries 

Evaluated demonstrated resources of iron ore in Guinea 
are contained in two major nonproducing deposits and 
amount to 935 MMlt, averaging 64 pet Fe. There are plans 
to develop the high-grade hematite deposit at Nimba in 
southern Guinea. The project was scheduled to produce 
about 5 to 10 Mmt/yr of sinter fines. Infrastructure and 
transport links to Liberian port facilities have been 
negotiated with Liberia to bring this project on stream, but 
no firm decisions have been made. The project is owned 50 
pet by Guinea and 50 pet by foreign shareholders. All of 
the production is programmed to be shipped to the foreign 
shareholders according to their ownership percentage. The 
majority of the ownership resides in Africa, Europe, and 
Japan. 

The Simandou deposit, owned by the Guinean Govern- 
ment, contains 590 MMlt of demonstrated resources at 63 
pet Fe. The deposit is still in an undeveloped status because 
of problems involved in transporting the ore from the 
deposit. A 760-km railroad from the deposit to port facilities 
at Conakry will have to be built. The project, if developed, 
has the potential to produce 20 Mmt/yr of pellet feed, lump 
ore, and sinter feed. 

Another significant deposit in the country is the Con- 
akry, which has a potential resource of 990 Mmt of 52 pet 
Fe. This deposit, which has disadvantages due to its nickel 
and chromium content, was shut down years ago and was 
not evaluated in this study. 



The largest potential Ivory Coast mining project known 
to date is the iron ore deposit at Mount Klahoyo in the Man 
region. The deposit contains an estimated 659 Mmt of 
demonstrated resources of 36 pet Fe. If developed, the proj- 
ect has the potential to produce 12 Mmt/yr of pellets. In ad- 
dition to the Mount Klahoyo deposit, the Ivory Coast has 
another 1.7 billion mt of potential iron ore resources. 

The lack of basic infrastructure and transportation 
systems within the country hinders the development of its 
mineral resources. The Mount Klahoyo project lacks the 
proper ore transportation system from the deposit site to 
the port at San Pedro. Two solutions have received detailed 
consideration: (1) pelletization at the mine site and transpor- 
tation of the pellets via a 376-km railroad, and (2) transpor- 
tation of the ore as a slurry through a 330-km pipeline and 
pelletization at the port. The Government favors construc- 
tion of a railroad, as it can serve multiple uses, but the reces- 
sion in the steel industry and the major drop in world iron 
ore prices have caused a postponement of the railroad con- 
struction. There has also been recent consideration given 
to reducing the size of this project. 

Senegal's iron ore deposits are of the Lake Superior type, 
consisting of high-grade hematite and low-grade magnetite 
ores. The hematite ore averages 64 pet Fe and the magnetite 
ore between 35 and 50 pet Fe. Demonstrated resources 
amount to 335 Mmlt of the high-grade hematite and are 
located in the Faleme area 700 km southeast of the port 
of Dakar. In addition, there are a further 150 Mmlt of prob- 
able and possible reserves. If financing can be obtained, pro- 
duction from this deposit is tentatively scheduled to begin 
in the late 1980's at a potential annual rate of 4.8 Mmt of 
lump ore and 7.2 Mmt of sinter fines. Potential markets 
for the products are France, the Federal Republic of Ger- 
many, and Japan. The project could open up the eastern 
provinces of the country and make Senegal a significant 
supplier of high-grade iron ore for about 25 yr. 

There are two known deposits of iron ore in Sierra 
Leone: Marampa, which is an active producer; and the 
Tonkolili, which is classified as a potential resource, con- 
taining an estimated 100 Mmt of magnetite ore at 55 pet 
Fe. The deposits are located within 80 km of each other. 
The Marampa deposit has remaining demonstrated 
resources of 57 Mmlt, consisting of 18 Mmlt of itabirite at 
38 pet Fe and 39 Mmlt of recoverable tailings at 27 pet Fe. 
The Marampa Mine was closed in 1975 owing to adverse 
market conditions and production problems. Production 
capacity is 1.0 Mmt/yr sinter fines at 65 pet Fe. Prior to 
closing, Marampa had established export markets for its 
ore in Japan and Europe. The mine has an estimated life 
of 28 yr. 

The evaluated Algerian iron deposits contain over 1.0 
billion It of demonstrated resources averaging 52 pet Fe. 
This tonnage, which amounts to almost 7 pet of Africa's iron 
ore reserve base, is located in two geographical areas- 
northern Algeria and the Sahara. The huge Gara Djebilet 
deposit in southwestern Algeria contains about 970 Mmlt 
at 53 pet Fe. Initial development of this deposit has been 
started by the recent signing of an $8 million contract with 
the Soviet Union for technical mining assistance. Large in- 
frastructure expenditures will be required before this 
deposit will become a producer 

Iron ore is currently being mined at the Ouenza prop- 
erty, which has about 40 Mmlt remaining of 53 pet Fe. Total 
production in Algeria is around 3.5 Mmt/yr with about 1 
Mmt/yr being exported. Most of Algeria's exports go to 
Europe, with about 43 pet of its exports destined to the Euro- 
pean Communist bloc countries. The present domestic 



50 






LEGEND 


• 


City or town 


i 


Port 


* 


Producing mine 


X 

i i i 


Undeveloped deposit 


i i i 


• rxanroQQ 




i i 


500 1,000 

, i . 1 1 



Scale, km 



MAP LOCATION 




AFRICA 



Figure 32. — Location map, Northern African deposits. 



capacity of 500,000 mt of steel is currently under considera- 
tion for expansion to 2 Mmlt by 1987. Completion of this 
steelmaking expansion program will require Algeria to im- 
port iron ore to meet domestic demand until the Gara 
Djebilet deposit is developed. Locations of the North African 
deposits evaluated are shown in figure 32. 

The Wadi Shatti deposit is Libya's major iron ore 
resource, with demonstrated resources of 782 million It. The 
deposit is mainly magnetite with some siderite at an 
average grade of 51 pet Fe plus a high phosphorus content. 
The project has a potential production rate of 10 Mmt/yr 
sinter fines to be used domestically upon completion of the 
Misratah iron and steel complex. Misratah, however, will 
operate at only 3.5 Mmt/yr maximum capacity when com- 
pleted. Libya currently imports all of its iron and steel re- 
quirements, mainly from the Federal Republic of Germany 
and Italy. 

Resources of iron ore in Mauritania consist of Lake 
Superior-type deposits containing high-grade hematite 



averaging 65 pet Fe and a low-grade deposit of magnetites- 
quartzites with 37 pet iron. Total demonstrated resources 
of 511 MMlt were evaluated from two properties in 
Mauritania. 

Iron ore is the primary export product of the country, 
accounting for 80 pet of all exports. Over the 10-yr period 
1974-83, Mauritania had produced an average of 8.8 
Mmt/yr. However, the production in 1982 and 1983 aver- 
aged just 7.8 Mmt, owing to the weakness of the iron ore 
market. Sinter fines is the main product produced, with 
some lump ore; about 85 pet is exported to Europe and about 
15 pet to Japan for sintering at the customer's plants. Pro- 
duction capacity is 9.5 Mmt/yr of sinter fines. 

Development work is continuing on the Guelbs 
magnetite deposit with a scheduled production target of 3 
Mmt of iron concentrate suitable for agglomeration and 
pelletization by 1986, rising to 6.3 Mmt by 1988. A second 
stage of development is designed to increase output to 9 
Mmt by 1992. This project will replace the open pit mines 



51 



of the Kedia D'Idjil area, which are scheduled to be phased 
out by 1990. These deposits have demonstrated resources 
of 380 Mmlt at 37 pet Fe. 

Cameroon's iron ore resources are Precambrian deposits 
of the Lake Superior type, consisting of hematite and ancil- 
lary magnetite. Large amounts of laterite resources grading 
50 to 55 pet Fe are also known to exist but have not yet 
received any meaningful investigation. The locations of 
deposits evaluated in Cameroon and Gabon are shown in 
figure 33. 

The major deposit having significant commercial poten- 
tial is Les Mamelles, located in the southwest corner of the 
country, 10 km inland from the Atlantic Ocean. This prop- 



erty contains all of the country's proven reserves, and 
demonstrated resources of nearly 197 Mmlt at 30 pet Fe. 
It has the potential to produce approximately 4 Mmt/yr of 
pellets if brought into production. All production will be ex- 
ported, with 75 pet planned for France and 25 pet to other 
European countries. 

The ores in Gabon are of the Lake Superior type and 
consist mainly of hematite with accessory minerals of 
goethite and magnetite. The major deposit in Gabon is the 
Belinga deposit with evaluated demonstrated resources of 
over 500 Mmlt at 64 pet Fe. The phosphorus content of the 
ore body is high and requires selective mining. Possible 
development of this project is dependent on completion of 



TTTTT'irr'TW^^^WT 



W&AT L A NT/ Cwmm 






OCEAN t 



- Santa j^s. 
:::x:x:x:: : x : x : x : : : x : xClara 



■:■:•: f guotor x:x:: : x : x : : : ; : : : x 






LEGEND 




• 


City or town 




£ 


Port 




X 


Undeveloped deposit 
- Railroad 




1 1 1 






1 ' 


100 200 

iii i 


300 

i 



Scale, km 



AFRICA 



Figure 33.— Location map, central African deposits. 



52 



the Trans Gabon railway, which was about 50 pet completed 
in December 1982. The second portion is scheduled for com- 
pletion by late 1987. 

The project has a potential production rate of 12 Mmt/yr 
of sinter fines. The product distribution is based on the 
ownership of the development consortium, which is made 
up of companies in France, Belgium, and Romania. It is an- 
ticipated that all of the production will be exported. 



India 

India's large reserves of iron ore, amounting to 7.1 
billion It of crude iron ore, represent about 3.4 pet of the 
world's iron ore reserves. Another 20 billion It are con- 
sidered inferred resources. Evaluated in this study were five 
properties with nearly 1.6 billion It of demonstrated 
resources of iron. Iron ore is India's second largest mineral 




Bolani 



UMUWMM 



LEGEND 

• City or town 
i, Port 

X Producing mine 
PP Pellet plant 
1 — I- Railroad 



O 500 

i i i i i i 

Scale, km 



Figure 34.— Location map, 'ndian deposits. 



53 



resource next to coal and lignite. Although capacity exists 
for producing 54 Mmt/yr of iron ore, output has only been 
about 40 Mmt/yr. The main producing region is the Goa 
Territory, followed by the States of Orissa, Bihar, and Kar- 
nataka. Locations of the Indian iron ore deposits evaluated 
are shown in figure 34. 

Productivity in the Indian iron ore mining industry is 
relatively low as an average, although productivity in a few 
larger mines is higher. The main reason for this is that the 
industry consists of a large number of smaller production 
entities that do not lend themselves to large-scale mining 
and mechanization. Turnover of the work force is minimal 
despite relatively low wages. 

Mechanized mining is a relatively recent development 
in Indian iron ore production. Manual mining of float ore 
still persists in some of the smaller, scattered deposits and 
even exists in conjunction with mechanized operations. 
Therefore, the mining of large, in-place deposits by 
mechanized means has become the most important produc- 
tion strategy. 

India has major constraints on exports, which include 
inadequate port and rail facilities and high rail freight 
charges. Transportation problems have been the major hin- 
drances in the expansion of Indian iron ore trade. Inade- 
quate port facilities with shallow water depths and obsolete 
stockpiling, reclaiming, and loading capabilities have 
prevented the utilization of large-capacity ore carriers. 
Railway development and expansion have lagged behind 
the development of the mineral industry in general and the 
iron ore industry in particular. Truck haulage of mineral 
commodities is limited to short distance transport by poor 
road conditions, which are exacerbated during the monsoon 
season and by the inadequate number of trucks available. 
Planned port dredging and expansion programs should 
ameliorate the shipping bottleneck somewhat, and slurry 
pipeline and conveyor systems will deliver the product to 
railheads and ports more efficiently. 

India is a major exporter of iron ore, with Japan, 
Romania, and the Republic of Korea being the major 
customers. About 60 pet of India's current production is 
destined for the export market, with the balance consumed 
by the domestic iron and steel industry. 

India's newest iron ore mine was completed in 1980 at 
Kudremukh. This project is one of the larger new iron proj- 
ects worldwide during the past decade. Kudremukh has the 
capacity to produce high-grade concentrate at the rate of 
7.5 Mmt/yr, which could make it the largest single iron ore 
producer in India. Capacity production, though not likely 
for some time, may expand India's iron ore exports by about 
25 pet to 30 Mmt/yr. 

Availability curves for Indian iron ore products are not 
shown in order to prevent disclosing confidential informa- 



tion due to the small number of properties involved. At a 
15-pct DCFROR, between 15 and 270 Mmlt of sinter fines 
is potentially available within a total cost range of $0.22 
to $0.31 per iron unit, f.o.b. port, from four of the five 
evaluated Indian properties. 

Some 1984 Japanese market prices for sinter fines from 
India ranged from $0.25 to $0.27 per iron unit, f.o.b. port. 
Approximately 213 Mmlt (79 pet) of the total potentially 
available sinter fines in India are within a total cost range 
of $0.22 to $0.26 per iron unit, f.o.b. port, at a 15-pct 
DCFROR. 

The potential availability of lump ore from these four 
properties, within the total cost range of $0.26 to $0.35 per 
iron unit, is between 50 and 260 Mmlt, f.o.b. port, at a 15-pct 
DCFROR. All properties are producing operations. Prices 
for lump ore being marketed to Japan in 1984 ranged from 
$0.27 to $0.30 per iron unit, f.o.b. port. Approximately 203 
Mmlt (78 pet) of the total lump ore is potentially available 
at less than a total cost of $0.30 per iron unit, f.o.b. port, 
15-pct DCFROR. 

The Kudremukh Mine, the only evaluated Indian prop- 
erty that produces pellet feed, accounts for approximately 
16 pet of the 168 Mmlt of pellet feed potentially available 
in MEC's. A 1984 market price for pellet feed from 
Kudremukh was $0.28 per iron unit, f.o.b. Mangalore. 



Regional Availability Summary 

From the deposits evaluated in this study, a total of 18.6 
billion It of sinter fines, 4.9 billion It of lump ore, 14.7 billion 
It of pellets, and 820 MMlt of pellet feed are potentially 
available in MEC's. However, the availability of iron ore 
products is much more important on a regional basis 
because each product is marketed in specific industrialized 
regions of the world, thus causing large volumes of inter- 
national trade. Therefore, the availability of iron ore prod- 
ucts can be related to the actual market and market prices. 

Table 16 summarizes the availability of the various iron 
ore products on a regional basis. Listed for each producing 
region are the iron ore product, the number of producers 
and nonproducers of that product, the total available ton- 
nage, and the tonnage available at costs equal to or below 
various reference prices. The availability of each product 
in each region is listed with reference to prices in two 
markets: Europe and Japan. For each reference market, 
reference prices which are equivalent to 1984 market prices 
are given. The tonnage available at a total cost that is less 
than or equal to the reference price is then given, il- 
lustrating what is potentially available in individual 
regions. 



54 



Table 16.— Summary of availability of iron ore products for selected regions 



Reference market: Europe 



Reference market: Japan 



Region or 
country 



Producers 1 Nonproducers 1 



Total 
available 
tonnage, 

MMIt 



Reference 

price, 2 

$/ltu 


Tonnage available 

at total cost less 

than or equal to 

reference price, 3 

MMIt, f.o.b. 


Reference 

price, 2 

$/ltu 


Tonnage available 

at total cost less 

than or equal to 

reference price, 3 

MMIt, f.o.b. 


NAp 
0.26 


NAp 
1,700 


0.24 

.24 


825 

1,600 


NAp 

6.33 

NAp 

.34-.36 


NAp 
225 
NAp 
9 442 


.24 

.21 

.28 

NAp 


280 
225 
208 

NAp 


NAp 

.28 

NAp 

NAp 


W 

186 

W 

W 


NAp 
.22 
.28 

NAp 


W 

">141 

W 

W 


NAp 
NAp 


NAp 
NAp 


27-.30 
,25-.27 


"203 
213 


.38 
NAp 


W 
NAp 


NAp 
NAp 


NAp 
NAp 


6.36 

6.33 

.28 

12 .80-.86 


1,100 

1,400 

W 

13 2,100 


.31 

.26 

NAp 

NAp 


1,300 

2,600 

NAp 

NAp 



Brazil: 

Lump ore 12 2 1,200 

Sinter fines 13 1 2,700 

South America: 

Lump ore 4 4 5 520 

Sinter fines 5 5 5 1 ,300 

Pellet feed 7 5 6 480 

Pellets 8 7 2 1 ,000 

Africa: 

Lump ore 1 2 910 

Sinter fines 8 9 3,900 

Pellet feed 1 2 160 

Pellets 2 3 510 

India: 

Lump ore 4 260 

Sinter fines 4 270 

Europe: 

Pellets 4 490 

Lump ore 2 540 

Australia: 

Lump ore 3 3 1 ,400 

Sinter fines 5 12 8,500 

Canada: Pellets 3 930 

United States: Pellets 11 30 1 1 ,400 

W Withheld. NAp Not applicable. 

1 1ndividual properties may produce more than 1 product. 

2 Reference price is equivalent to various 1984 market prices for European or Japanese markets 

3 Total cost is determined a* a 15-pct DCFROR. 

"Includes Venezuela and Chile. 

includes Chile, Peru, and Venezuela. 

6 c&f price. 



includes Brazil, Peru, and Venezuela. 

includes Brazil. 

9 At $0.38/ltu Fe. 

10 At $0.24/ltu Fe. 

"At $0.30/ltu Fe. 

12 Market is within United States. 

' 3 At $0.80/ltu Fe. 



CONCLUSIONS 



The world's iron and steel industry is dependent upon 
the supply of iron derived from a variety of iron ore deposits. 
In an effort to appraise the resources of iron ore, the Bureau 
of Mines evaluated 129 mines and deposits in MEC's. The 
mines and deposits analyzed included 63 producing mines 
and 66 nonproducing properties with in situ iron ore ton- 
nage for all properties combined totaling 75.3 billion It, with 
29.8 billion It of contained iron. The study excluded mines 
and deposits in China, the U.S.S.R., and other CPEC's. 

The study revealed that demonstrated resources of iron 
ore are more than adequate to satisfy demand well into the 
next century and that large quantities of demonstrated iron 
ore resources, particularly in developing countries, are 
ready to be developed. In areas where geological mapping 
is well advanced, as in Europe and North America, new 
discoveries of iron ore that will significantly alter the order 
of magnitude of current resource data are unlikely. The 
possibility exists, however, for significant new discoveries 
in the developing areas of the world that could expand the 
reserve base. 

Four countries— the United States, Australia, Brazil, 
and Canada— contain 79 pet of the demonstrated resources 
evaluated in this study. The United States has 49 pet of the 
total iron ore resources. It should be noted that the high 
total for the United States is mainly due to the detailed 
coverage of the deposits, including the magnetic taconites 
in Minnesota. 

From the resources evaluated in this study, annual, 
total and regional availability of iron ore products was 



determined, as shown in tables 13, 14, and 16, respectively. 
Availability of resources producing various iron ore products 
is given as totals and on an annual basis through the year 
2000 at total costs less than or equal to recent market price 
levels. 

Of all the marketable iron ore products potentially 
available, sinter fines comprise the greatest share, total- 
ing 18.6 billion It. Of this total, 8.5 billion It are from 
Australia, 2.7 billion It are from Brazil, and 3.9 billion It 
are available from Africa. At total costs less than or equal 
to 1984 market prices, with a range of $0.22 to $0.33 per 
iron unit, between 2.9 and 10.4 billion It of sinter fines are 
potentially available. 

Iron ore pellets make up the second largest marketable 
iron ore product. Approximately 14.7 billion It are poten- 
tially available in the MEC's with 3.3 billion It from foreign 
properties and 11.4 billion It from domestic operations. At 
total costs less than or equal to the 1984 foreign market 
price range of $0.34 to $0.38 per iron unit, approximately 
350 to 440 MMIt are potentially available in MEC's, ex- 
cluding the United States. Of the 11.4 billion It potentially 
available from domestic deposits, 2.1 to 2.2 billion It are 
available at total costs less than or equal to the 1984 U.S. 
market price range of $0.80 to $0.86 per iron unit. 

The total potential availability of lump ore evaluated 
in this study is 4.9 billion It. Brazil accounts for 1.2 billion 
It of the total, and Australia accounts for 1.4 billion It. At 
less than the 1984 market price of $0.26 to $0.32 per iron 
unit, 2.2 to 3.0 billion It of lump ore are potentially 
available. 



55 



There are approximately 820 MMlt of pellet feed poten- 
tially available in MEC's. Brazil and Venezuela, with a com- 
bined 312 MMlt, are the major sources in the MEC's. Ap- 
proximately 208 MMlt are potentially available at total 
costs less than a typical 1984 market price of $0.28 per iron 
unit f.o.b. port. 

In the past several years many factors have affected the 
iron ore industry. Changes in the world economy, high in- 
flation, high labor rates in developed countries, and high 
energy costs have all affected the costs of beneficiation and 
transportation, the major components of delivered cost of 
iron ore products. 

This analysis showed that capital cost expenditures for 
an iron ore mine are large. Estimates of investments for 
large mines with capacities of 35 to 46 MMmt/yr range from 
$2.0 billion to $3.4 billion. This is due to large volumes of 
ore mined and processed, the transport required to move 
the product, and the necessary infrastructure support. 

Operating costs for surface iron ore mining range from 
$1.00/lt to $5.00/lt. Beneficiation costs range from $3.25/lt 
to $5.00/lt, depending on types of ore being processed. 
Pelletizing costs for magnetite ores range from $6.00/lt to 
$12.80/lt in various regions; hematite ore processing costs 
range from $15.00/lt to $22.70At. Pelletizing is very fuel 
intensive, and costs are heavily influenced by rising or fall- 
ing fuel prices. Price changes for oil or natural gas will have 
a corresponding positive or negative effect on the world's 
pelletizing industry. The possibility of higher fuel prices led 
to developments within the industry to reduce energy con- 
sumption in the pelletizing process. 



Similarly, fuel fluctuations can affect the cost of 
transporting iron ore. Rail rates vary by distance 
transported and country, while ocean shipping rates vary 
by distance shipped and size of vessel. Ocean shipping costs 
can account for up to 70 pet of the final cost of the iron ore 
product. Changes in the ocean shipping industry have had 
a singular impact on the iron ore picture in recent decades. 
The construction and use of large vessels of up to 280,000 
DWT and the construction of ports capable of berthing and 
loading these vessels have made many areas previously 
regarded as too far from markets now major economic 
sources of iron ore. Despite rising fuel prices of the early 
1980's, ocean freight rates have declined owing to the fierce 
competition in shipping commerce and low demand for iron 
ore. 

Compounding these problems for the U.S. iron ore in- 
dustry have been the added effects of the decline in domestic 
steel demand and continuing imports of large amounts of 
foreign steel. Since the domestic iron ore industry is directly 
linked to the U.S. steel industry, there is a general consen- 
sus that the continuing contraction of the U.S. steel in- 
dustry, due partly to increasing imports of foreign steel, will 
have an adverse effect on the domestic iron ore industry. 

In summary, the iron ore industries of the world have 
substantial resources of iron ore to satisfy the demand for 
many years into the future. The revitalization of the iron 
ore industry, on the domestic scene, will be directly linked 
to the fate of the U.S. steel industry. However, with the re- 
cent declines in the inflation rate and in energy costs, the 
general outlook for the world iron ore industry may become 
somewhat more encouraging than in the past few years. 



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56 



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